JJ's Company completed the following transactions during the current accounting year ended December 31: March 1: Borrowed $25, 000 on a 2 year, 12% note. Interest is paid annually. April 1: Borrowed cash and signed a $20,000, 2 year, noninterest - bearing note. The market rate of interest for this level of risk was judged by the lender to be 12%. Throughout the year, sold merchandise worth $30, 000 that carried a 2 - year warranty for parts and labor. Jack estimates that the cost of any warranty repairs will be 1.5% of the total sales. As of December 31, actual warranty repair costs were $250. June 1: Jack co signed and guaranteed payment of a $50,000, 14%, 1 year note owed by Bob Corp, one of Jack's suppliers, in order to help them continue to supply Jack's needed parts. Jack believes that default by Bob is only reasonably possible. December sales revenue (excluding sales taxes collected) was $400,000. The sales tax rate is 5%. Jack had already paid the sales taxes owed on all previous months' sales. On December 31, Jack accrued interest on all unpaid borrowings. Required: For each of the items above, provide entries that Jack should make to get all accounts correct as of December 31. List all liabilities that would be part of "current liabilities" in Jack's December 31 balance sheet, including their year - end amounts.
JJ's Company completed the following transactions during the current accounting year ended December 31: March 1: Borrowed $25, 000 on a 2 year, 12% note. Interest is paid annually. April 1: Borrowed cash and signed a $20,000, 2 year, noninterest - bearing note. The market rate of interest for this level of risk was judged by the lender to be 12%. Throughout the year, sold merchandise worth $30, 000 that carried a 2 - year warranty for parts and labor. Jack estimates that the cost of any warranty repairs will be 1.5% of the total sales. As of December 31, actual warranty repair costs were $250. June 1: Jack co signed and guaranteed payment of a $50,000, 14%, 1 year note owed by Bob Corp, one of Jack's suppliers, in order to help them continue to supply Jack's needed parts. Jack believes that default by Bob is only reasonably possible. December sales revenue (excluding sales taxes collected) was $400,000. The sales tax rate is 5%. Jack had already paid the sales taxes owed on all previous months' sales. On December 31, Jack accrued interest on all unpaid borrowings. Required: For each of the items above, provide entries that Jack should make to get all accounts correct as of December 31. List all liabilities that would be part of "current liabilities" in Jack's December 31
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