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 1. Accounts Payable Cash Interest Expense Inventory Notes Payable 2. Accounts Payable Cash Inventory Litigation Claims Payable Notes Payable May 1. 1. Accounts Payable Cash Equipment Inventory Notes Payable 2. Accounts Payable Accounts Receivable Cash Interest Expense Office Equipment 3. Accounts Payable Cash Equipment Interest Expense Notes Payable May 15. 1. Accounts Payable Cash Equipment Litigation Claims Payable Notes Payable 2. Accounts Payable Cash Equipment Interest Expense Litigation Claims Payable 3. Accounts Receivable Equipment Inventory Litigation Loss Notes Payable 4.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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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. If an amount box does not require an entry, leave it blank. Assume a 360-day year.

 

Apr. 15

1.

  • Accounts Payable
  • Cash
  • Interest Expense
  • Inventory
  • Notes Payable

2.

  • Accounts Payable
  • Cash
  • Inventory
  • Litigation Claims Payable
  • Notes Payable

May 1.

1.

  • Accounts Payable
  • Cash
  • Equipment
  • Inventory
  • Notes Payable

2.

  • Accounts Payable
  • Accounts Receivable
  • Cash
  • Interest Expense
  • Office Equipment

3.

  • Accounts Payable
  • Cash
  • Equipment
  • Interest Expense
  • Notes Payable

May 15.

1.

  • Accounts Payable
  • Cash
  • Equipment
  • Litigation Claims Payable
  • Notes Payable

2.

  • Accounts Payable
  • Cash
  • Equipment
  • Interest Expense
  • Litigation Claims Payable

3.

  • Accounts Receivable
  • Equipment
  • Inventory
  • Litigation Loss
  • Notes Payable

4.

  • Accounts Payable
  • Cash
  • Equipment
  • Inventory
  • Tools

July 14.

1.

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

2.

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

3.

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

Aug 16.

1.

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

2.

  • Accounts Payable-Exige Co.
  • Cash
  • Inventory
  • Notes Payable
  • Office Equipment
Date
Account
Debit
Credit
Apr. 15
Cash
225,000
Notes Payable v
225,000
May 1
Equipment v
310,400
Interest Expense v
9,600
Notes Payable v
320,000
May 15
Notes Payable v
225,000
Interest Expense v
1,125
Notes Payable
225,000
Cash v
1,125
July 14
Notes Payable
225,000
Interest Expense v
3,000
Cash v
228,000
Aug. 16
Inventory v
Accounts Payable-Exige Co.
Sept. 15
Accounts Payable-Exige Co.
90,000
Notes Payable v
90,000
Notes Payable v
Oct. 28
320,000
Cash v
320,000
Oct. 30
Notes Payable v
90,000
Interest Expense v
675
Cash
90,675
Transcribed Image Text:Date Account Debit Credit Apr. 15 Cash 225,000 Notes Payable v 225,000 May 1 Equipment v 310,400 Interest Expense v 9,600 Notes Payable v 320,000 May 15 Notes Payable v 225,000 Interest Expense v 1,125 Notes Payable 225,000 Cash v 1,125 July 14 Notes Payable 225,000 Interest Expense v 3,000 Cash v 228,000 Aug. 16 Inventory v Accounts Payable-Exige Co. Sept. 15 Accounts Payable-Exige Co. 90,000 Notes Payable v 90,000 Notes Payable v Oct. 28 320,000 Cash v 320,000 Oct. 30 Notes Payable v 90,000 Interest Expense v 675 Cash 90,675
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