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. For a compound transaction, if an amount box does not require an entry, leave it blank. Assume a 360-day year.

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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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. For a compound transaction, if an amount box does not require an entry, leave it blank. Assume a 360-day year.

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