Question

Described below are certain transactions of Skysong Corporation. The company uses the periodic inventory system. 1. On February 2, the corporation purchased goods from Martin Company for $63,300 subject to cash discount terms of 2/10, 1/30. 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 $52,000 from General Motors Company, paying $3,000 in cash and signing a one-year, 10% note for the balance of the purchase price, 3. On May 1, the corporation borrowed $82,900 from Chicago National Bank by signing a $92,500 zero-interest-bearing note due one year from May 1. 4. On August 1, the board of directors dedared a $280,000 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 entero for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit February 25

Answer 1

Date	Account Titles and Explanation	Debit	Credit
February 2	Purchases [$63300 x (100% - 2%)]	62034
	Accounts payable		62034
February 26	Accounts payable	62034
	Purchases discount lost (2% x $63300)	1266
	Cash		63300
April 1	Truck	52000
	Cash		3000
	Notes payable		49000
May 1	Cash	82900
	Discount on notes payable	9600
	Notes payable		92500
August 1	Cash dividends	280000
	Dividends payable		280000
September 10	Dividends payable	280000
	Cash		280000

Adjusting entries:

No.	Account Titles and Explanation	Debit	Credit
1	Interest expense ($49000 x 10% x 9/12)	3675
	Interest payable		3675
2	Interest expense ($9600 x 8/12)	6400
	Discount on notes payable		6400
3	No Entry	0
	No Entry		0
4	No Entry	0
	No Entry		0