Question

Jack Hammer Company completed the following transactions. The annual accounting period ends December 31. Apr 30 Received $450,000 from Commerce Bank after signing a 12-month, 5 percent, promissory note. 6 Purchased merchandisee on account at a cost of $65,000. (Assume a perpetual inventory system.) June July 15 Paid for the June 6 purchase. Aug. 31 Signed a contract to provide security service to a small apartment complex starting in September, and collected six months' fees in advance amounting to $18,000 Dec. 31 Determined salary and wages of $30,000 were earned but not yet paid as of December 31 (ignore payroll taxes). Dec. 31 Adjusted the accounts at year-end, relating to interest Dec. 31 Adjusted the accounts at year-end, relating to security service. Required: 1. & 2. Prepare journal entries for each of the transactions through August 31 and adjusting entries required on December 31 3. Show how all of the liabilities arising from these items are reported on the balance sheet at December 31 Complete this question by entering your answers in the tabs below. Req 1 and 2 Req 3 Prepare journal entries for each of the transactions through August 31 and adjusting entries required on December 31. (Do not round intermediate calculations. If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.) Show lessA View transaction list Journal entry worksheet 3 4 5 6 1 2 7 Record the borrowing of $450,000. Note: Enter debits before cred its. Debit Credit Date General Journal Apr 30 Clear entry Record entry View general journal Req 3 Req 1 and 2

Answer 1

Solution Required (1 & 2): Journal Entries Credit Date April 30 I Debit $450,000 General Journal Cash Notes Payable (To record the borrowings of $450,000) $450,000 Credit Date June 6 Debit $65,000 General Journal Merchandise Inventory Accounts Payable (To record purchase of merchandise on account) $65,000 Credit Date July 15 General Journal Accounts Payable Cash Debit $65,000 $65,000 (To record payment made to suppliers) Date Aug. 31 Debit $18,000 Credit General Journal Cash Unearned Service Revenue (To record receipt of advance service revenue) $18,000 Credit Date Dec. 31 General Journal Salaries and wages expense Salaries and wages payable To record accrued salaries and wages expense) Debit $30,000 $30,000 Credit Date Dec. 31 Debit $15,000 General Journal Interest Expense ($450,000 x 5% x 8 / 12) Interest payable (To record accrued salaries and wages expense) $15,000 Credit Date Dec. 31 | I Debit $12,000 General Journal Unearned Service Revenue Service Revenue ($18,000 x 4/6) (To record service revenue for the services performed) $12,000 Required (3) JACK HAMMER COMPANY Balance Sheet (Partial) At December 31 Current liabilities: Notes Payable Unearned Service Revenue ($18,000 - $12,000) Salaries and wages payable Interest Payable $450,000 $6,000 $30,000 $15,000 Total current liabilities $501,000