Question

PLEASE HELP.....Read the information very carefully!

The following items were selected from among the transactions completed by Sherwood Co. during the current year Purchased merchandise on account from Kirkwood Co., $402,000, terms n/30 Мaг. 1 Issued a 30-day, 4% note for $402,000 to Kirkwood Co., on account 31 Apr 30 Paid Kirkwood Co. the amount owed on the note of March 31 Borrowed $186,000 from Triple Creek Bank, issuing a 45-day, 4 % note. Jun Jul 1 Purchased tools by issuing a $246,000, 60-day note to Poulin Co., which discounted the note at the rate of 5% 16 Paid Triple Creek Bank the interest due on the note of June 1 and renewed the loan by issuing a new 30-day, 6.5% note for $186,000. (Journalize both the debit and credit to the notes payable account.) 15 Aug Paid Triple Creek Bank the amount due on the note of July 16. Paid Poulin Co. the amount due on the note of July 1. Purchased equipment from Greenwood Co. for $440,000, paying $120,000 cash and issuing a series of ten 8% notes for $32,000 each, coming due at 30-day 30 Dec 1 intervals. 22 Settled a product liability lawsuit with a customer for $319,500, payable in January. Accrued the loss in a litigation claims payable account. 31 Paid the amount due to Greenwood Co. on the first note in the series issued on December 1 Required: Journalize the transactions. Refer to the Chart of Accounts for exact wording of account 1. titles. Assume a 360-day year. Round your answers to the nearest dollar. Journalize the adjusting entry for each of the following accrued expenses at the end of 2. the current year (refer to the Chart of Accounts for exact wording of account titles): warranty cost, $29,000 Product a. b. Interest on the nine remaining notes owed to Greenwood Co. Assume a 360-day year CHART OF ACCOUNTS Sherwood Co.

Answer 1

Amount ($) JOURNAL ENTRIES Mar.1 Inventory Accounts payable-Kirkwood Co. 4,02,000 4,02,000 Mar 31 4,02,000 Accounts payable-Kirkwood Co. Notes payable 4,02,000 Apr.30 Notes payable Interest expense (402000*4%*30/360) Cash 4,02,000 1,340 4,03,340 Jun.1 1,86,000 Cash Notes payable 1,86,000 Jul.1 2,46,000 Tools Notes payable 2,46,000 Jul.16 930 Interest expense (186000*4%*45/360) Cash 930 Jul.16 1,86,000 Notes payable Notes payable (Renew of loan by issue of new 30-day 6.5% note) 1,86,000

Aug. 15 Notes payable Interest expense (186000*6.5%*30/360) Cash 1,86,000 1,008 1,87,008 Aug.30 Notes payable Interest expense (246000*5%*60/360) Cash 2,46,000 2,050 2,48,050 Dec. 1 4,40,000 Office equipment Cash Notes payable (32000*10) 1,20,000 3,20,000 Dec.22 3,19,500 Litigation loss Litigation claims payable 43,19,500 32,000 213 32,213 Dec.31 Notes payable Interest expense (32000*1*8%*30/360) Cash ADJUSTING ENTRIES Dec.31 Product warranty expense Product warranty payable Dec.31 Interest expense (32000*9*8%*30/360) Interest payable 29,000 29,000 1,920 1,920