Answered: ons: Nov. 4 Received a $6,500, 90-day,…

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

Record the following transactions for the Scott Company:

Transactions:
Nov.	4	Received a $6,500, 90-day, 6% note from Tim’s Co. in payment of the account.
Dec.	31	Accrued interest on the Tim’s Co. note.
Feb.	2	Received the amount due from Tim’s Co. on the note.

Required:

Journalize the above transactions. Refer to the Chart of Accounts for exact wording of account titles. Round your answers to two decimal places. Assume a 360-day year when calculating interest.

CHART OF ACCOUNTS

Scott Company

General Ledger

	ASSETS
110	Cash
111	Petty Cash
121	Accounts Receivable-Batson Co.
122	Accounts Receivable-Bynum Co.
123	Accounts Receivable-Calahan Inc.
124	Accounts Receivable-Dodger Co.
125	Accounts Receivable-Fronk Co.
126	Accounts Receivable-Miracle Chemical
127	Accounts Receivable-Solo Co.
128	Accounts Receivable-Tim’s Co.
129	Allowance for Doubtful Accounts
131	Interest Receivable
132	Notes Receivable-Tim’s Co.
141	Inventory
145	Supplies
151	Prepaid Insurance
181	Land
191	Equipment
192	Accumulated Depreciation

	LIABILITIES
210	Accounts Payable
211	Salaries Payable
213	Sales Tax Payable
214	Interest Payable
215	Notes Payable

	EQUITY
310	Common Stock
311	Retained Earnings
312	Dividends

	REVENUE
410	Sales
610	Interest Revenue

	EXPENSES
510	Cost of Goods Sold
520	Salaries Expense
521	Advertising Expense
522	Depreciation Expense
523	Delivery Expense
524	Repairs Expense
531	Rent Expense
533	Insurance Expense
534	Supplies Expense
536	Credit Card Expense
537	Cash Short and Over
538	Bad Debt Expense
539	Miscellaneous Expense
710	Interest Expense

### General Journal

#### Journalize the entry for the transaction on November 4. Refer to the Chart of Accounts for exact wording of account titles.

**Journal**
| DATE | DESCRIPTION | POST. REF. | DEBIT | CREDIT |
|------|--------------|------------|-------|--------|
| 1 | | | | |
| 2 | | | | |

**Accounting Equation**
| ASSETS | LIABILITIES | EQUITY |
|--------|-------------|--------|
| | | |

#### Journalize the entry for the transaction on December 31. Refer to the Chart of Accounts for exact wording of account titles. Round your answers to two decimal places. Assume a 360-day year when calculating interest.

**Journal**
| DATE | DESCRIPTION | POST. REF. | DEBIT | CREDIT |
|------|--------------|------------|-------|--------|
| 1 | | | | |
| 2 | | | | |

**Accounting Equation**
| ASSETS | LIABILITIES | EQUITY |
|--------|-------------|--------|
| | | |

#### Journalize the entry for the transaction on February 2. Refer to the Chart of Accounts for exact wording of account titles. Round your answers to two decimal places. Assume a 360-day year when calculating interest.

**Journal**
| DATE | DESCRIPTION | POST. REF. | DEBIT | CREDIT |
|------|--------------|------------|-------|--------|
| 1 | | | | |
| 2 | | | | |

**Accounting Equation**
| ASSETS | LIABILITIES | EQUITY |
|--------|-------------|--------|
| | | |

---

#### Explanation of Tables:

- **Journal Section:** Each table under the "Journal" heading has columns for Date, Description, Posting Reference (Post. Ref.), Debit, and Credit. These tables are used to record the details of transactions on specified dates (November 4, December 31, and February 2).

- **Accounting Equation Section:** Each table under the "Accounting Equation" heading has columns for Assets, Liabilities, and Equity. These tables are used to represent the effect of the transactions on the fundamental accounting equation, which is:

\[ \text{Assets} = \text{Liabilities} + \text{

**Journalizing Transactions: An Example Exercise**

In this exercise, you will learn how to journalize the entry for a specific transaction. Follow the given instructions to complete the task. The provided table helps visualize the journal entry process and the impact on the accounting equation.

**Instructions for the Exercise:**
1. Journalize the entry for the transaction on February 2.
2. Refer to the Chart of Accounts for the exact wording of account titles.
3. Round your answers to two decimal places.
4. Assume a 360-day year when calculating interest.

**Table for Journal Entries and Accounting Equation:**

This table is divided into two sections:
1. **Journal**: For recording the date, description, post reference, debit, and credit entries.
2. **Accounting Equation**: To illustrate the impact on assets, liabilities, and equity.

| **Date** | **Description** | **Post. Ref.** | **Debit** | **Credit** | **Assets** | **Liabilities** | **Equity** |
|----------|-------------------|-----------------|-----------|-------------|------------|------------------|------------|
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |

**Explanation of Columns:**
- **Date**: Enter the date of the transaction.
- **Description**: Provide a brief description of the transaction.
- **Post. Ref.**: Post reference indicating where the entry is posted in the ledger.
- **Debit** and **Credit**: Enter the amounts for debit and credit transactions.
- **Accounting Equation Columns**:
- **Assets**: Impact on total assets resulting from the transaction.
- **Liabilities**: Impact on total liabilities.
- **Equity**: Impact on total equity.

Ensure all journal entries are accurately recorded and balanced, maintaining the integrity of the accounting equation: **Assets = Liabilities + Equity**.

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