Question

Described below are certain transactions of Pearl Corporation. The company uses the periodic inventory system. 1. On February 2, the corporation purchased goods from Martin Company for $63,200 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 $46,000 from General Motors Company, paying $4,000 in cash and signing a one-year, 12% note for the balance of the purchase price. 3. On May 1, the corporation borrowed $77,200 from Chicago National Bank by signing a $86,080 zero-interest- bearing note due one year from May 1. 4. On August 1, the board of directors declared a $275,100 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 o for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Credit Debit 61936 February 2 Inventory Accounts Payable 61936 February 26 Accounts Payable 61936 Purchase Discounts 1264 Cash 63200 April 1 Trucks 46000 Cash 4000 Notes Payable 46000 May 1 Cash 77200 Discount on Notes Payable 3880 Notes Payable 86080 August 1 Retained Earnings 275100 Dividends Payable 275100 September 10 - Dividends Payable 275100

Answer 1

Answerto Part 1. Date Credit Debit 61,936 61,936 Feb 26 61,936 1,264 63,200 Apr1 46,000 Account Titles and Explanation Purchases ($63,200 * 98%) Accounts Payable Accounts Payable Lost Purchase Discounts Cash Vehicle Cash Notes Payable Cash Discount on Notes Payable Notes Payable Retained Earnings Dividend Payable Dividend Payable Cash 4,000 42,000 May 1 77,200 8,880 86,080 Aug 1 275,100 275,100 Sep 10 275,100 275,100 Answerto Part 2. Debit Credit No. Dec 31 Dec 31 3,780 Account Titles and Explanation No Entry Required Interest Expense ($42,000* 12% * 9/12) Interest Payable Notes Payable ($8,880 * 8/12) Discount on Notes Payable No Entry Required 3,780 Dec 31 5,920 5,920 Dec 31