Liability Transactions The following items were selected from among the transactions completed by Shin Co. during the current year: Jan. 10. Purchased merchandise on account from Beckham Co., $144,000, terms n/30. Feb. 9. Issued a 30-day, 7% note for $144,000 to Beckham Co., on account. Mar. 11. Paid Beckham Co. the amount owed on the note of February 9. May 1. Borrowed $180,000 from Verity Bank, issuing a 45-day, 8% note. June 1. Purchased tools by issuing a $111,000, 60-day note to Rassmuessen Co., which discounted the note at the rate of 9%. 15. Paid Verity Bank the interest due on the note of May 1 and renewed the loan by issuing a new 45-day, 7% note for $180,000. (Journalize both the debit and credit to the notes payable account.) July 30. Paid Verity Bank the amount due on the note of June 15. 30. Paid Rassmuessen Co. the amount due on the note of June 1. Dec. 1. Purchased office equipment from Lambert Co. for $96,000, paying $16,000 and issuing a series of ten 5% notes for $8,000 each, coming due at 30-day intervals. 15. Settled a product liability lawsuit with a customer for $76,000, payable in January. Shin accrued the loss in a litigation claims payable account. 31. Paid the amount due Lambert Co. on the first note in the series issued on December 1.
Bad Debts
At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.
Accounts Receivable
The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.
Liability Transactions
The following items were selected from among the transactions completed by Shin Co. during the current year:
| Jan. 10. | Purchased merchandise on account from Beckham Co., $144,000, terms n/30. |
| Feb. 9. | Issued a 30-day, 7% note for $144,000 to Beckham Co., on account. |
| Mar. 11. | Paid Beckham Co. the amount owed on the note of February 9. |
| May 1. | Borrowed $180,000 from Verity Bank, issuing a 45-day, 8% note. |
| June 1. | Purchased tools by issuing a $111,000, 60-day note to Rassmuessen Co., which discounted the note at the rate of 9%. |
| 15. | Paid Verity Bank the interest due on the note of May 1 and renewed the loan by issuing a new 45-day, 7% note for $180,000. (Journalize both the debit and credit to the notes payable account.) |
| July 30. | Paid Verity Bank the amount due on the note of June 15. |
| 30. | Paid Rassmuessen Co. the amount due on the note of June 1. |
| Dec. 1. | Purchased office equipment from Lambert Co. for $96,000, paying $16,000 and issuing a series of ten 5% notes for $8,000 each, coming due at 30-day intervals. |
| 15. | Settled a product liability lawsuit with a customer for $76,000, payable in January. Shin accrued the loss in a litigation claims payable account. |
| 31. | Paid the amount due Lambert Co. on the first note in the series issued on December 1. |
Required:
1. Journalize the transactions. If an amount box does not require an entry, leave it blank. Assume a 360-day year. Don't round the intermediate calculations and round the final answers to the nearest dollar amount.
For a compound transaction, accounts should be listed largest to smallest.
| Date | Account | Debit | Credit |
|---|---|---|---|
| Jan. 10 | |||
| Feb. 9 | |||
| Mar. 11 | |||
| May 1 | |||
| June 1 | |||
| June 15 | |||
| July 30 | |||
| July 30 | |||
| Dec. 1 | |||
| Dec. 15 | |||
| Dec. 31 | |||
2. Journalize the
| Item | Account | Debit | Credit |
|---|---|---|---|
| a. | |||
| b. | |||
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