Prepare the necessary joumal entries for the following fiscal year 2022 transactions made by Airflowing Corp. Additional Information: 1 Ai rflowing Corp. year-end is 12/31. 2 Assume straight-line amortization of discounts. 3 Airflowing Corp. records all purchases and payables at gross.
Prepare the necessary joumal entries for the following fiscal year 2022 transactions made by Airflowing Corp. Additional Information: 1 Ai rflowing Corp. year-end is 12/31. 2 Assume straight-line amortization of discounts. 3 Airflowing Corp. records all purchases and payables at gross.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Transcribed Image Text:**Journal Entries for Airflowing Corp. Fiscal Year 2022**
**Additional Information:**
1. Airflowing Corp.'s year-end is December 31.
2. Assume straight-line amortization of discounts.
3. Airflowing Corp. records all purchases and payables at gross.
---
**1. February 2, 2022**
*Transaction:* Airflowing Corp. purchased goods from Vents Inc. for $250,000. Terms were 3/10, n/30.
*Journal Entry:*
- **Debit:** Inventory $250,000
- **Credit:** Accounts Payable $250,000
---
**2. February 26, 2022**
*Transaction:* Airflowing Corp. paid Vents Inc. for the February 2, 2022 purchase.
*Journal Entry:*
- **Debit:** Accounts Payable $250,000
- **Credit:** Cash $250,000
---
**3. June 1, 2022**
*Transaction:* Airflowing Corp. purchased a truck for $85,000 from Ford Motor Company Fleet Sales Division. Paid $10,000 on purchase date and signed a 1-year, 10% note for the remaining balance.
*Journal Entry:*
- **Debit:** Vehicles (Truck) $85,000
- **Credit:** Cash $10,000
- **Credit:** Notes Payable $75,000
---
**4. July 1, 2022**
*Transaction:* Airflowing Corp. borrowed from St. Paul National Bank $3,500,000 by signing a $3,700,000 zero-interest bearing note due one year from July 1.
*Journal Entry:*
- **Debit:** Cash $3,500,000
- **Debit:** Discount on Notes Payable $200,000
- **Credit:** Notes Payable $3,700,000
**Note:** Airflowing Corp.'s CFO has concerns related to cash in the first quarter of 2023.
---
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Expert Solution
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The financial transactions are recorded in the form of journal entry.
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