Question

Problem 13-1 Described below are certain transactions of Pharoah Corporation. The company uses the periodic inventory system 1. On February 2, the corporation purchased goods from Martin Company for $67,500 subject to cash discount terms of 2/10, n/30. Purchases and accounts payable are recorded by the corporation at net amounts after cash discounts. The invoice was paid on February 26. 2. On April 1, the corporation bought a truck for $47,000 from General Motors Company, paying $5,000 in cash and signing a one-year, 10% note for the balance of the purchase price. 3. On May 1, the corporation borrowed $82,400 from Chicago National Bank by signing a $91,040 zero-interest-bearing note due one year from May 1. 4. On August 1, the board of directors declared a $307,900 cash dividend that was payable on September 10 to stockholders of record on August 31. Make all the journal entries necessary to record the transactions above using appropriate dates. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount Is entered. Do not indent manually Date Account Titles and Explanation Debit Credit February 26

Answer 1

Date Particulars DR $ 66,150.00 CR 02-Feb Purchase :( 67500-(67500*296)) $ 66,150.00 Accounts payable To record purchase on credit $ 66,150.00 $ 1,350.00 26-Feb Accounts payable Discount lost Cash To record the amount paid for purchases after discount period $ 67,500.00 01-AprTruck $47,000.00 Note payable Cash To record the purchase of truck by paying down payment and balance on note $ 42,000.00 $ 5,000.00 01-Aprl Interest expense $ 3,150.00 -42000" 10%" (9/12) $ 3,150.00 Interest payable To record annual interest on truck note 01-May Cash $ 82,400.00 $ 8,640.00 Discount on note Note payable To record 83000 borrowed from C national bank by signing note $ 91,040.00 01-MayvlInterest expense $ 5,760.00 8640* (8/12) Discount on note $ 5,760.00 To record annual interest on C national bank note 01-Aug Retained earnings $307,900.00 $307,900.00 Dividends payable To record dividend declaration 10-Sep Dividends payable $307,900.00 Cash $307,900.00 To record payment of dividend