Question

0-27A Journalizing liability transactions following transactions of Houston Pharmacies occurred during 2015 and 2016: Current Liabilities and Payroll Learning Objectives 1,3 2015 Jan. 29 Cash $17,490 9 Jan. 9 Purcha 29 Feb. 5 Jul 9 Aug 31 Purchased computer equipment at a cost of $13,000, signing a six-month, 9% note payable for that amount. Recorded the week's sales of $66,000, 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, 9% note, plus interest, at maturity Purchased merchandise inventory for $6,000, signing a six-month, 10% note payable. The company uses the perpetual inventory system. Accrued warranty expense, which is estimated at 3% of sales of $601,000 Accrued interest on all outstanding notes payable. Dec. 31 31 2016 Feb. 29 Paid the six-month 10% note, plus interest, at maturity. Journalize the transactions in Houston's general journal. Explanations are not required,

Answer 1

Houston Pharmacies

Journal Entries

Date	Account	Debit ($)	Credit ($)
09-Jan-15	Computer Equipment	13,000
	9% Note Payable		13,000
29-Jan-15	Accounts Receivable*	52,470
	Cash	17,490
	Sales		66,000
	Sales Tax Payable		3,960
05-Feb-15	Sales Tax Payable	3,960
	Cash		3,960
09-Jul-15	9% Note Payable	13,000
	Interest Expense (13000*9%*0.5years)	585
	Cash		13,585
31-Aug-15	Merchandise Inventory	6,000
	10% Note Payable		6,000
31-Dec-15	Warranty Expense (601000*3%)	18,030
	Warranty Liability		18,030
31-Dec-15	Interest Expense (6000*10%*4/12)	200
	Interest Payable		200
29-Feb-16	10% Note Payable	6,000
	Interest Payable	200
	Interest Expense	100
	Cash		6,300

Explanation:

*

Particulars	Amount
Sales for the week	66,000
Add: Sales Tax@6%	3,960
Sales amount after including Sales Tax	69,960
Sales on Credit	52,470
Cash Sales	17,490