Question

P11-27A Journalizing liability transactions Learning Objectives 1, 3 The following transactions of Denver Pharmacies occurred during 2013 and 2014: Jan. 29 Cash $16,960 Dec. 31 Interest Expense $360 2013 Jan. 9 Purchased computer equipment at a cost of $9,000, signing a six-month, 6% note payable for that amount. Recorded the week's sales of $64,000, three-fourths on credit and one-fourth for cash. Sales amounts are subject to a 6% state sales tax. Ignore cost of goods sold. Sent the last week's sales tax to the state Paid the six-month, 6% note, plus interest, at maturity. Purchased merchandise inventory for $12,000, signing a six-month, 9% note payable. The company uses the perpetual inventory system Accrued warranty expense, which is estimated at 2% of sales of $603,000 Accrued interest on all outstanding notes payable GL 29 Feb. 5 Jul, 9 Aug. 31 Dec. 31 31 2014 Feb. 28 Paid off the 9% note plus interest at maturity. Journalize the transactions in Denver's general journal. Explanations are not required

Answer 1

Journal entries
date	explanation	debit	credit
9-Jan	computer equipment	9000
	notes payable		9000
29-Jan	cash	16960
	accounts receivables	50880
	sales revenue		64000
	sales tax payable		3840
5-Feb	sales tax payable	3840
	cash		3840
9-Jul	notes payable	9000
	interest expense	270
	cash		9270
31-Aug	Inventory	12000
	notes payable		12000
31-Dec	warranty expense	12060
	accrued warranty expense
31-Dec	interest expense	360
	interest payable		360
2014 feb 28	notes payable	12000
	interest expense	180
	interest payable	360
	cash		12540