Liability TransactionsThe following items were selected from among the transactions completed by Aston Martin Inc. during the current year:Apr. 15.Borrowed $225,000 from Audi Company, issuing a 30-day, 6% note for that amount.May 1.Purchased equipment by issuing a $320,000, 180-day note to Spyder Manufacturing Co., which discounted the note at the rate of 6%.15.Paid Audi Company the interest due on the note of April 15 and renewed the loan by issuing a new 60-day, 8% note for $225,000. (Record both the debit and credit to the notes payable account.)July 14.Paid Audi Company the amount due on the note of May 15.Aug. 16.Purchased merchandise on account from Exige Co., $90,000, terms, n/30.Sept. 15.Issued a 45-day, 6% note for $90,000 to Exige Co., on account.Oct. 28.Paid Spyder Manufacturing Co. the amount due on the note of May 1.30.Paid Exige Co. the amount owed on the note of September 15.Nov. 16.Purchased store equipment from Gallardo Co. for $450,000, paying $50,000 and issuing a series of twenty 9% notes for $20,000 each, coming due at 30-day intervals.Dec. 16.Paid the amount due Gallardo Co. on the first note in the series issued on November 16.28.Settled a personal injury lawsuit with a customer for $87,500, to be paid in January. Aston Martin Inc. accrued the loss in a litigation claims payable account.Required:For a compound transaction, accounts should be listed largest to smallest. Journalize the transactions. If an amount box does not require an entry, leave it blank. Assume a 360-day year. Apr. 151.Accounts PayableCashInterest ExpenseInventoryNotes Payable2.Accounts PayableCashInventoryLitigation Claims PayableNotes PayableMay 1.1.Accounts PayableCashEquipmentInventoryNotes Payable2.Accounts PayableAccounts ReceivableCashInterest ExpenseOffice Equipment3.Accounts PayableCashEquipmentInterest ExpenseNotes PayableMay 15.1.Accounts PayableCashEquipmentLitigation Claims PayableNotes Payable2.Accounts PayableCashEquipmentInterest ExpenseLitigation Claims Payable3.Accounts ReceivableEquipmentInventoryLitigation LossNotes Payable4.Accounts PayableCashEquipmentInventoryToolsJuly 14.1.Accounts Payable-Exige Co.Accounts Receivable-Exige Co.CashInventoryNotes Payable2.Accounts Payable-Exige Co.Accounts Receivable-Exige Co.CashInterest ExpenseInventory3.Accounts Payable-Exige Co.CashInterest ExpenseInventoryNotes PayableAug 16.1.Accounts Payable-Exige Co.CashInventoryLitigation Claims PayableNotes Payable2.Accounts Payable-Exige Co.CashInventoryNotes PayableOffice EquipmentSept 15.1.Accounts Payable-Exige Co.CashInterest ExpenseInventoryNotes Payable2.Accounts Payable-Exige Co.CashInventoryNotes PayableOffice EquipmentOct 28.1.Accounts PayableCashInventoryLitigation Claims PayableNotes Payable2.CashInterest ExpenseInventoryNotes PayableOffice EquipmentOct. 301.Accounts PayableAccounts Receivable-Exige Co.CashInventoryNotes Payable2.Accounts PayableAccounts Receivable-Exige Co.CashInterest ExpenseInventory3.Accounts PayableCashInterest ExpenseInventoryNotes PayableNov. 161.CashInterest ExpenseLitigation Claims PayableNotes PayableStore Equipment2.Accounts PayableInterest ExpenseInventoryNotes PayableStore Equipment3.CashInterest ExpenseInventoryStore EquipmentToolsDec 16.1.Accounts Payable-Exige Co.Accounts Receivable-Exige Co.CashInventoryNotes Payable2.Accounts Payable-Exige Co.Accounts Receivable-Exige Co.CashInterest ExpenseInventory3.Accounts Payable-Exige Co.CashInterest ExpenseInventoryNotes PayableDec 28.1.CashInterest ExpenseLitigation Claims PayableLitigation LossNotes Payable2.CashInterest ExpenseLitigation Claims PayableLitigation LossNotes Payable Journalize the adjusting entry for each of the following accrued expenses at the end of the current year:a. Product warranty cost, $26,800.b. Interest on the 19 remaining notes owed to Gallardo Co.If an amount box does not require an entry, leave it blank.A.1.CashLitigation Claims PayableLitigation LossProduct Warranty ExpenseProduct Warranty Payable2.CashLitigation Claims PayableLitigation LossProduct Warranty ExpenseProduct Warranty PayableB.1.CashInterest ExpenseInterest PayableNotes PayableProduct Warranty Payable2.CashInterest ExpenseInterest PayableProduct Warranty ExpenseProduct Warranty Payable July 14Aug. 16Sept. 15Oct. 28Oct. 30Nov. 16Dec. 16Dec. 282. Journalize the adjusting entry for each of the following accrued expenses at the end of the current year:a. Product warranty cost, $26,800.b. Interest on the 19 remaining notes owed to Gallardo Co.If an amount box does not require an entry, leave it blank.ItemAccountDebitCredit Liability TransactionsThe following items were selected from among the transactions completed by Aston Martin Inc. during the current year:Apr. 15. Borrowed $225,000 from Audi Company, issuing a 30-day, 6% note for that amount.May 1. Purchased equipment by issuing a $320,000, 180-day note to Spyder Manufacturing Co.,which discounted the note at the rate of 6%.15. Paid Audi Company the interest due on the note of April 15 and renewed the loan by issuinga new 60-day, 8% note for $225,000. (Record both the debit and credit to the notes payableaccount.)July 14. Paid Audi Company the amount due on the note of May 15.Aug. 16. Purchased merchandise on account from Exige Co., $90,000, terms, n/30.Sept. 15. Issued a 45-day, 6% note for $90,000 to Exige Co., on account.Oct. 28. Paid Spyder Manufacturing Co. the amount due on the note of May 1.30. Paid Exige Co. the amount owed on the note of September 15.Nov. 16. Purchased store equipment from Gallardo Co. for $450,000, paying $50,000 and issuing aseries of twenty 9% notes for $20,000 each, coming due at 30-day intervals.Dec. 16. Paid the amount due Gallardo Co. on the first note in the series issued on November 16.28. Settled a personal injury lawsuit with a customer for $87,500, to be paid in January. AstonMartin Inc. accrued the loss in a litigation claims payable account.Required:For a compound transaction, accounts should be listed largest to smallest.1. Journalize the transactions. If an amount box does not require an entry, leave it blank. Assume a 360-day year.DateAccountDebitCreditApr. 15May 1May 15

The format of journal entries is standard.The right date, the general ledger accounts, the amount(s)…

Answered: a $320,000, 180-day note to Spyder…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Liability Transactions

The following items were selected from among the transactions completed by Aston Martin Inc. during the current year:

Apr. 15.	Borrowed $225,000 from Audi Company, issuing a 30-day, 6% note for that amount.
May 1.	Purchased equipment by issuing a $320,000, 180-day note to Spyder Manufacturing Co., which discounted the note at the rate of 6%.
15.	Paid Audi Company the interest due on the note of April 15 and renewed the loan by issuing a new 60-day, 8% note for $225,000. (Record both the debit and credit to the notes payable account.)
July 14.	Paid Audi Company the amount due on the note of May 15.
Aug. 16.	Purchased merchandise on account from Exige Co., $90,000, terms, n/30.
Sept. 15.	Issued a 45-day, 6% note for $90,000 to Exige Co., on account.
Oct. 28.	Paid Spyder Manufacturing Co. the amount due on the note of May 1.
30.	Paid Exige Co. the amount owed on the note of September 15.
Nov. 16.	Purchased store equipment from Gallardo Co. for $450,000, paying $50,000 and issuing a series of twenty 9% notes for $20,000 each, coming due at 30-day intervals.
Dec. 16.	Paid the amount due Gallardo Co. on the first note in the series issued on November 16.
28.	Settled a personal injury lawsuit with a customer for $87,500, to be paid in January. Aston Martin Inc. accrued the loss in a litigation claims payable account.

Required:

For a compound transaction, accounts should be listed largest to smallest.

Journalize the transactions. If an amount box does not require an entry, leave it blank. Assume a 360-day year.

Apr. 15

Accounts Payable
Cash
Interest Expense
Inventory
Notes Payable

Accounts Payable
Cash
Inventory
Litigation Claims Payable
Notes Payable

May 1.

Accounts Payable
Cash
Equipment
Inventory
Notes Payable

Accounts Payable
Accounts Receivable
Cash
Interest Expense
Office Equipment

Accounts Payable
Cash
Equipment
Interest Expense
Notes Payable

May 15.

Accounts Payable
Cash
Equipment
Litigation Claims Payable
Notes Payable

Accounts Payable
Cash
Equipment
Interest Expense
Litigation Claims Payable

Accounts Receivable
Equipment
Inventory
Litigation Loss
Notes Payable

Accounts Payable
Cash
Equipment
Inventory
Tools

July 14.

Accounts Payable-Exige Co.
Accounts Receivable-Exige Co.
Cash
Inventory
Notes Payable

Accounts Payable-Exige Co.
Accounts Receivable-Exige Co.
Cash
Interest Expense
Inventory

Accounts Payable-Exige Co.
Cash
Interest Expense
Inventory
Notes Payable

Aug 16.

Accounts Payable-Exige Co.
Cash
Inventory
Litigation Claims Payable
Notes Payable

Accounts Payable-Exige Co.
Cash
Inventory
Notes Payable
Office Equipment

Sept 15.

Accounts Payable-Exige Co.
Cash
Interest Expense
Inventory
Notes Payable

Accounts Payable-Exige Co.
Cash
Inventory
Notes Payable
Office Equipment

Oct 28.

Accounts Payable
Cash
Inventory
Litigation Claims Payable
Notes Payable

Cash
Interest Expense
Inventory
Notes Payable
Office Equipment

Oct. 30

Accounts Payable
Accounts Receivable-Exige Co.
Cash
Inventory
Notes Payable

Accounts Payable
Accounts Receivable-Exige Co.
Cash
Interest Expense
Inventory

Accounts Payable
Cash
Interest Expense
Inventory
Notes Payable

Nov. 16

Cash
Interest Expense
Litigation Claims Payable
Notes Payable
Store Equipment

Accounts Payable
Interest Expense
Inventory
Notes Payable
Store Equipment

Cash
Interest Expense
Inventory
Store Equipment
Tools

Dec 16.

Accounts Payable-Exige Co.
Accounts Receivable-Exige Co.
Cash
Inventory
Notes Payable

Accounts Payable-Exige Co.
Accounts Receivable-Exige Co.
Cash
Interest Expense
Inventory

Accounts Payable-Exige Co.
Cash
Interest Expense
Inventory
Notes Payable

Dec 28.

Cash
Interest Expense
Litigation Claims Payable
Litigation Loss
Notes Payable

Cash
Interest Expense
Litigation Claims Payable
Litigation Loss
Notes Payable

Journalize the adjusting entry for each of the following accrued expenses at the end of the current year:
a. Product warranty cost, $26,800.
b. Interest on the 19 remaining notes owed to Gallardo Co.
If an amount box does not require an entry, leave it blank.

Cash
Litigation Claims Payable
Litigation Loss
Product Warranty Expense
Product Warranty Payable

Cash
Litigation Claims Payable
Litigation Loss
Product Warranty Expense
Product Warranty Payable

Cash
Interest Expense
Interest Payable
Notes Payable
Product Warranty Payable

Cash
Interest Expense
Interest Payable
Product Warranty Expense
Product Warranty Payable

July 14
Aug. 16
Sept. 15
Oct. 28
Oct. 30
Nov. 16
Dec. 16
Dec. 28
2. Journalize the adjusting entry for each of the following accrued expenses at the end of the current year:
a. Product warranty cost, $26,800.
b. Interest on the 19 remaining notes owed to Gallardo Co.
If an amount box does not require an entry, leave it blank.
Item
Account
Debit
Credit

Liability Transactions
The following items were selected from among the transactions completed by Aston Martin Inc. during the current year:
Apr. 15. Borrowed $225,000 from Audi Company, issuing a 30-day, 6% note for that amount.
May 1. Purchased equipment by issuing a $320,000, 180-day note to Spyder Manufacturing Co.,
which discounted the note at the rate of 6%.
15. Paid Audi Company the interest due on the note of April 15 and renewed the loan by issuing
a new 60-day, 8% note for $225,000. (Record both the debit and credit to the notes payable
account.)
July 14. Paid Audi Company the amount due on the note of May 15.
Aug. 16. Purchased merchandise on account from Exige Co., $90,000, terms, n/30.
Sept. 15. Issued a 45-day, 6% note for $90,000 to Exige Co., on account.
Oct. 28. Paid Spyder Manufacturing Co. the amount due on the note of May 1.
30. Paid Exige Co. the amount owed on the note of September 15.
Nov. 16. Purchased store equipment from Gallardo Co. for $450,000, paying $50,000 and issuing a
series of twenty 9% notes for $20,000 each, coming due at 30-day intervals.
Dec. 16. Paid the amount due Gallardo Co. on the first note in the series issued on November 16.
28. Settled a personal injury lawsuit with a customer for $87,500, to be paid in January. Aston
Martin Inc. accrued the loss in a litigation claims payable account.
Required:
For a compound transaction, accounts should be listed largest to smallest.
1. Journalize the transactions. If an amount box does not require an entry, leave it blank. Assume a 360-day year.
Date
Account
Debit
Credit
Apr. 15
May 1
May 15

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