Here\'s your unique PP for chpt. 11: Warren Plastic, LLC complete these transact
ID: 2415698 • Letter: H
Question
Here's your unique PP for chpt. 11:
Warren Plastic, LLC complete these transactions in year 1 and year 2. Give general journal entries for them.
date yr
2/20 1 Purchased equipment for 40,000, signed a 8 month note, 7%.
2/28 1 Recorded the month's sales of 200,000, one-eighth cash, seven-eighth's credit.
Sales tax rate is 5.25%
3/20 1 Sent Feb. sales tax to the state.
4/30 1 Borrowed $255,000 on a long-term note, 7% note payable
Annual interest is to be paid each year on 4-30, starting yr. 2.
10/20 1 paid off the note dated 2-20-yr 1
11/30 1 bought inventory at a cost of 12,500. Signed a 3 month 3.25% note.
12/31 1 Accrued warranty expense, estimated at 2% of 2,400,000 of sales
12/31 1 Accrued Interest on ALL outstanding notes.
2/28 2 Paid off the inventory note at maturity, including interest.
4/30 2 Paid the annual interest on the 255,000 note.
Please help me with correct answers and ways. Thanks!!!
Explanation / Answer
Journal Entries
2/20 - equipment Dr $ 40,000
7% Note payable Cr $ 40,000
2/28 - Cash Dr $ 25,000
accounts Receivable Dr 175,000
Sales Revenue Cr $ 200,000
Sales Tax Expense Dr $10,500 ( 200,000 X 5.25%)
Sales Tax Payable Cr $ 10,500
3/20 - Sales Tax Payable Dr $ 10,500
Cash Cr $ 10,500
4/30 - Cash Dr $ 255,000
7% Note Payable Cr $ 255,000
10/20 - 7% Note payable Dr $ 40,000
interest Expense Dr $ 1,867 ( 7% X 40,000 x 8/12)
Cash Cr $ 41,867
11/30 - Inventory Dr $ 12,500
3.25% Note payable Cr $ 12,500
12/31 - Warranty expenses Dr $ 48,000 ( 2% X 2,400,000)
Accrued Warranty expenses Cr $ 48,000
12/31 - Interest Expense Dr $ 11,934
Accrued Interest Cr $ 11,934
Interest expense
4/30 - $ 255,000 X 7% X 8 /12 = $ 11,900
11/30 - $ 12,500 X 3.25% X 1/12 = $ 34
Total = $ 11,934
2/28 - 3.25% Note Dr $12,500
Interest payable Dr $ 34
Interest expense Dr $ 68
Cash Cr $ $ 12,602
4/30 - 7% Note payable Dr $ 255,000
Interest payable Dr $ 11,900
interest expense Dr $ 5,950
Cash Cr $ 272,850