Question

TUTORIAL QUESTIONS - LIABILITIES Question 1 On December 1, Destin Corporation borrowed RM50,000 on a 90-day, 6% note. Prepare the entries to record the issuance of the note, the accrual of interest at year end, and the payment of the note Question 2 During December 2016, Fashion Valley Publishing sold 2,500 12-month annual magazine subscriptions at a rate of RM30 each. The first issues were mailed in January 2013. Prepare the entries on Fashion Valley's books to record the sale of the subscriptions and the mailing of the first issues. Question 3 Landen Company had cash sales of RM54,166 (including taxes) for the month of June. Sales are subject to 6% sales tax. Prepare the entry to record the sale. Question 4 Prepare the necessary journal entries for the following transactions! (a) On September 1, Lore Company borrowed RM150,000 from National Bank on a 6-month, 8% note. (b) On December 31, Lore Company accrued interest (assume adjusting entries are only made at the end of the year). • liabilities accounts:

Answer 1

Solution:

1)

Date	Particulars	Debit	Credit
Dec-01	Cash	50,000
	Notes payable		50,000
Dec-31	Interest Expense	250
	Interest Payable		250
	(50,000*6%*30/360)
Mar-01	Interest Expense (50,000*6%*60/360)	500
	Interest Payable (50,000*6%*30/360)	250
	Notes payable	50,000
	Cash		50,750

　

2)

Date	Particulars	Debit	Credit
Dec-16	Cash	75,000
	Unearned Revenue		75,000
	(2,500 * $30 = $75,000)
Jan-17	Unearned Revenue	6,250
	Subscription Revenue		6,250
	(75000 / 12 = 6,250)

　

3)

Particulars	Debit	Credit
Cash	54,166
Sales Revenue		51,100
Sales Tax Payable		3,066

　

As per policy we have to answer first question. I have answered more than it