Question

Liability Transactions The following Rems were selected from among the transactions completed by Sherwood Co. during the current year Feb. 15. Purchased merchandise on account from Kirkwood Co., $144,000, terms /30. Mar. 17. Issued a 60-day, 6% note for $144,000 to Kirkwood Co., on account. May 16. Paid Kirkwood Co the amount owed on the note of March 17. June 15. Borrowed $169,200 from Triple Creek Bank, issuing a 60-day, 7 note July 21. Purchased tools by issuing a $72,000, 90-day note to Poulin Co., which discounted the nete at the rate of 6% Aug. 14. Pald Triple Creek Bank the interest due on the note of Sure 15 and renewed the loan by issuing a new 60-day, 10% note for $169,200. Journalize both the debit and credit to the notes payable account.) Oct. 13. Paid Triple Creek Bank the amount due on the note of August 14 Oct. 19. Paid Poulin Co, the amount due on the note of July 21. Dec. 1. Purchased office equipment from Greenwood Co. for $96,000, paying $16.000 cash and w ing series often notes for $8,000 each, coming due at 30-day intervals. Dec. 12. Settled a product liability lawsuit with a customer for $77,000, payable in January. Accrued the low in a litigation cas payable account Dec. 31. Paid the amount due to Greenwood Co. on the first note in the series issued on December 1 Required: 1. Journalize the transactions. If an amount box does not require an entry leave it bar. Assume a 360-day yearIf reared, round to one decimal place. Don't round the mediate calatons For a compound transaction, accounts should be listed largest to smallest Account Feb 15 Inventory & 144,000 Accounts Payabl e 144,000 Next >

Answer 1

Date	General Journal	Debit	Credit
15-Feb	Merchandise Inventory	144,000
	Accounts payable - kirkwood co.		144,000
17-Mar	Accounts payable - kirkwood co.	144,000
	Note payable		144,000
16-May	Note payable	144,000
	Interest expense 144,000*6%*60/360	1,440
	Cash		145,440
15-Jun	Cash	169,200
	Note payable		169,200
21-Jul	Tools	70,920
	Interest expense 72000*6%*90/360	1,080
	Note payable		72,000
14-Aug	Note payable	169,200
	Interest expense 169200*7%*60/360	1,974
	Note payable		169,200
	Cash		1,974
13-Oct	Note payable	169,200
	Interest expense 10%*60/360*169200	2,820
	Cash		172,020
19-Oct	Note payable	72,000
	Cash		72,000
1-Dec	Office equipment	95,000
	Note payable		79,000
	Cash		16,000
12-Dec	Litigation loss	77,000
	Litigation claims payable		77,000
31-Dec	Note payable	8,000
	Interest expense 8000*30/360*6%	40
	Cash		8,040
2
a	Product warrenty expense	14,200
	Product warrenty payable		14,200
	Warrenty expense for current year
b	Interest expense	360
	Interest payable		360
	Interest on notes
	8000*30/360*6%*9