Question

structions The following items were selected from among the transactions completed by Sherwood Co. during the current year. Mar. 1 31 Apr. Jun. 30 1 Purchased merchandise on account from Kirkwood Co., $300,000, terms 1/30. Issued a 30-day, 4% note for $300,000 to Kirkwood Co., on account. Paid Kirkwood Co. the amount owed on the note of March 31 Borrowed 5156,000 from Triple Creek Bank, issuing a 45-day, 4% note. Purchased tools by issuing a $228,000, 60-day note to Poulin Co., which discounted the note at the rate of 9% Aug Dec 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 $156,000. (Journalize both the debit and credit to the notes payable account) 15 Paid Triple Creek Bank the amount due on the note of July 16. 30 Paid Poulin Co the amount due on the note of July 1 1 Purchased equipment from Greenwood Co. for $580,000 paying $102,000 cash and issuing a series of ten 6% notes for $47.800 each, coming due at 30-day intervals 22 Settled a product liability lawsuit with a customer for $300.500 payable in January. Accrued the loss in a litigation claims payable account ! 31 Paid the amount dua to Greenhood Co on the first note in the series issued on December

Answer 1

Sherwood Co
	Journal Entries			Accounting Equation
Date	Journal	Debit	Credit	Asset	Liability	Equity
1-Mar	Inventory	$ 300,000.00		$    300,000.00
	To Accounts Payable- Kirkwood Co		$ 300,000.00		$    300,000.00
31-Mar	Accounts Payable- Kirkwood Co	$ 300,000.00			$ (300,000.00)
	To Notes Payable		$ 300,000.00		$    300,000.00
30-Apr	Notes Payable	$ 300,000.00			$ (300,000.00)
	Interest Expense	$      1,000.00
	To Cash		$ 301,000.00	$ (301,000.00)
	(Being amount paid along with Interest @ 4% for 30 day)
1-Jun	Cash	$ 156,000.00		$    156,000.00
	To Notes Payable		$ 156,000.00		$    156,000.00
	(Being amount borrowed from Triple Creek Bank by issuing a 45 day, 4% note)
1-Jul	Tools	$ 228,000.00		$    228,000.00
	To Notes Payable		$ 228,000.00		$    228,000.00
16-Jul	Interest Expenses	$          780.00
	To Cash		$          780.00	$          (780.00)
	(Being Interest @4% paid to Triple Creek Bank $156,000*4%*45/360 days)
16-Jul	Notes Payable	$ 156,000.00			$ (156,000.00)
	To Notes Payable		$ 156,000.00		$    156,000.00
	(Being Loan renewed by issuing a new 30 day, 6.5% note for $156,000)
15-Aug	Notes Payable	$ 156,000.00			$ (156,000.00)
	Interest Expenses	$          845.00
	To Cash		$ 156,845.00	$ (156,845.00)
	(Being amount paid aong with Interest to Triple Creek Bank)
30-Aug	Notes Payable	$ 228,000.00			$ (228,000.00)
	Interest Expenses	$      3,420.00
	To Cash		$ 231,420.00	$ (231,420.00)
	(Being amount paid to Paulin Co)
1-Dec	Office Equipment	$ 580,000.00		$    580,000.00
	To Cash		$ 102,000.00	$ (102,000.00)
	To Notes Payable- Greenwood Co		$ 478,000.00		$ (478,000.00)
	(Being equipment purchased by paying cash and issuing a series of ten 6% ntes for $47,800 each)
22-Dec	Litigation Claim Payable	$ 300,500.00			$ (300,500.00)
	To Cash		$ 300,500.00	$ (300,500.00)
	(Being liability settled by paying the customer)
31-Dec	Notes Payable- Greenwood Co	$    47,800.00			$    (47,800.00)
	Interest Expenses	$          239.00
	To Cash		$    48,039.00	$    (48,039.00)
	(being amount of First Note in the series paid to Greenwood Co)
	Adjusting Journal Entries			Accounting Equation
Date	Journal	Debit	Credit	Asset	Liability	Equity
31-Dec	Product Warranty Expenses	$    28,000.00
	To Product Warranty Payable		$    28,000.00		$      28,000.00
31-Dec	Interest Expenses	$      2,151.00
	To Interest Expenses Payable		$      2,151.00		$        2,151.00
	(Being interest @6% on ($478,000-$47,800 charged to books of account)