Instructions Mar 1 Purchased merchandise on account from Galston Co., $414,000,
ID: 2569291 • Letter: I
Question
Instructions Mar 1 Purchased merchandise on account from Galston Co., $414,000, terms n/30 Issued a 30-day, 4% note for $414,000 to Galston Co., on account. Paid Galston Co. the amount owed on the note of March 31 Borrowed $180,000 from Pilati Bank, issuing a 45-day, 4% note 31 Apr. 30 1 Jul 1 Purchased tools by issuing a $228,000, 60-day note to Zegna Co., which discounted the note at the rate of 6% Paid Pilati Bank the interest due on the note of June 1 and renewed the loan by issuing a new 30-day, 6.5% note for $180,000. (Journalize both the debit and credit to the notes payable account.) Paid Pilati Bank the amount due on the note of July 16 Paid Zegna Co. the amount due on the note of July 1 16 Aug 15 30 Dec. 1 Purchased office equipment from Taylor Co. for $520,000, paying $90,000 and issuing a series of ten 496 notes for $43,000 each, coming due at 30-day intervals Settled a product liability lawsuit with a customer for $315,000, payable in January Pioneer accrued the loss in a litigation claims payable account. Paid the amount due Taylor Co. on the first note in the series issued on December 1 22 31 Required: 1. Journalize the transactions. Refer to the Chart of Accounts for exact wording of account titles. Assume a 360-day year Round your answers to the nearest dollar 2. Journalize the adjusting entry for each of the following accrued expenses at the end of the current year (refer to the Chart of Accounts for exact wording of account titles) A. Product warranty cost, $26,500. B. Interest on the nine remaining notes owed to Taylor Co. Assume a 360-day yearExplanation / Answer
Date Account title Debit Credit Mar.1 Inventory 414000 Accounts payable 414000 Mar.31 Accounts payable 414000 Notes payable 414000 [ converted accounts payable into notes payable] Apr.30 Notes payable 414000 Interest expense 1380 Cash 415380 [Discharged note payable along with interest 414000*4%*30/360=1380] Jun.1 Cash 180000 Notes payable 180000 [borrowed money on notes] Jul.1 Tools 225720 Discount on notes payable 2280 Notes payable 228000 [Discount= 228000*6%*60/360= 2280, balance amount is the value of tools] Jul.16 Interest expense 900 Notes payable 180000 Notes payable 180000 Cash 900 [Interest paid= 180000*4%*45/360=900] Aug.15 Interest expense 600 Notes payable 180000 Cash 180600 [Paid interest= 180000*4%*30/360=600 and the face amount] Aug.30 Notes payable 228000 Interest expense 2280 Cash 228000 Discount on notes payable 2280 [Paid notes payable] Dec.1 Office equipment 520000 Cash 90000 Notes payable 430000 [Purchased office equipment] Dec.22 Litigation claims expense 315000 Litigation claims payable 315000 [settled a dispute] Dec.31 Notes payable 43000 Interest expense 143.33 Cash 43,143.33 [Paid note payable, interest=43000*4%*1/12= 143.33] Dec.31 Warranty expense 26500 Warranty payable 26500 [ warranty cost accrued] Dec.31 Interest expense 1290 Interest payable 1290 [Accrued interest= 43000*9*4%*1/12=1290 for 1 months]