On January 2, Summers Company received a machine that the company had ordered with an invoice price of $85,000. Freight costs of $1000 were paid by the vendor per the sales agreement. The company exchanged the following on January 2 to acquire the machine: a Issued 2,000 shares of Summers Company common stock, par value $1 (market value, $3.50 per share). b. Signed a note payable for $60,000 with an 1.5 percent interest rate (principal plus interest are due April 1 of the current year). c The balance of the invoice price was on account with the vendor, to be paid in cash by January 12. On January 3, Summers Company paid $2,400 cash for installation costs to prepare the machine for use. On January 12. Summers Company paid the balance due on its accounts payable to the vendor, 3. Indicate the effects of the purchase and subsequent cash payment on the accounting equation. (Enter decreases to account categories as negative amounts.)

On January 2, Summers Company received a machine that the company had ordered with an invoice price of $85,000. Freight costs of $1000 were paid by the vendor per the sales agreement. The company exchanged the following on January 2 to acquire the machine: a Issued 2,000 shares of Summers Company common stock, par value $1 (market value, $3.50 per share). b. Signed a note payable for $60,000 with an 1.5 percent interest rate (principal plus interest are due April 1 of the current year). c The balance of the invoice price was on account with the vendor, to be paid in cash by January 12. On January 3, Summers Company paid $2,400 cash for installation costs to prepare the machine for use. On January 12. Summers Company paid the balance due on its accounts payable to the vendor, 3. Indicate the effects of the purchase and subsequent cash payment on the accounting equation. (Enter decreases to account categories as negative amounts.)

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Question: The following transactions apply to Ozark Sales for Year 1: 1. The business was started when the company received $48,500 from the issue of common stock. 2. Purchased equipment inventory of $175,000 on account. 3. Sold equipment for $204,500 cash (not including sales tax). Sales tax of 7 percent is collected when the merchandise is sold. The merchandise had a cost of $129,500. 4. Provided a six-month warranty on the equipment sold. Based on industry estimates, the warranty claims would amount to 4 percent of sales. 5. Paid the sales tax to the state agency on $154,500 of the sales. 6. On September 1, Year 1, borrowed $21,500 from the local bank. The note had a 6 percent interest rate and matured on March 1, Year 2. 7. Paid $5,700 for warranty repairs during the year. 8. Paid operating expenses of $56,000 for the year. 9. Paid $124,100 of accounts payable. 10. Recorded accrued interest on the note issued in transaction no. 6. 1. Prepare the income statement for Year 1. 2.…
Geary Corporation had the following transactions: Apr. 15 - Issued a $6,000, 60-day, eight percent note payable in payment of an account with Marion Company. May 22 - Borrowed $50,000 from Sinclair Bank, signing a 60-day note at nine percent. June 14 - Paid Marion Company the principal and interest due on the April 15th note payable. July 13 - Purchased $15,000 of merchandise from Sharp Company; signed a 90-day note with eight percent interest. July 21 - Paid the May 22 note due to Sinclair Bank. Oct 02 - Borrowed $38,000 from Sinclair Bank, signing a 120-day note at twelve percent interest. Oct 11 - Paid the note payable and accrued interest to the Sharp Company (July 13). Record these transactions in general journal form. Record any adjusting entries for interest in general journal form. Geary Corporation has a December 31 year-end.
Shore Co. sold merchandise to Blue Star Co. on account, $112,000, terms FOB shipping point, n/30. The cost of the goods sold is $67,200. Shore paid freight of $1,800. Shore Co. issued a credit memo for $7,500 to Blue Star Co. for merchandise that was returned. The cost of the merchandise returned was $4,000. Journalize Shore Co.'s entry for the sale, credit memo, and payment of amount due. If an amount box, does not require an entry, leave it blank. Sale Credit Memo Payment 00 00 00 00 00 00 00 00 00 00 00 00
The following items were selected from among the transactions completed by Sherwood Co. during the current year: Mar. 1 Purchased merchandise on account from Kirkwood Co., $225,000, terms n/30. 31 Issued a 30-day, 8% note for $225,000 to Kirkwood Co., on account. Apr. 30 Paid Kirkwood Co. the amount owed on the note of March 31. Jun. 1 Borrowed $600,000 from Triple Creek Bank, issuing a 45-day, 6% note. Jul. 1 Purchased tools by issuing a $50,000, 60-day note to Poulin Co., which discounted the note at the rate of 6%. 16 Paid Triple Creek Bank the interest due on the note of June 1 and renewed the loan by issuing a new 30-day, 7% note for $600,000. (Journalize both the debit and credit to the notes payable account.) Aug. 15 Paid Triple Creek Bank the amount due on the note of July 16. 30 Paid Poulin Co. the amount due on the note of July 1. Dec. 1 Purchased equipment from Greenwood Co. for $280,000, paying $80,000 cash and issuing a series of ten 9% notes for…
On June 3, Pearl Company sold to Chester Company merchandise having a sale price of $5,600 with terms of 3/10, n/60, f.o.b. shipping point. An invoice totaling $95, terms n/30, was received by Chester on June 8 from John Booth Transport Service for the freight cost. On June 12, the company received a check for the balance due from Chester Company. (a) Prepare journal entries on the Pearl Company books to record all the events noted above under each of the following bases. (1) Sales and receivables are entered at gross selling price. (2) Sales and receivables are entered at net of cash discounts.
The following transactions apply to Ozark Sales for Year 1: The business was started when the company received $48,000 from the issue of common stock. Purchased merchandise inventory of $176,000 on account. Sold merchandise for $202,000 cash (not including sales tax). Sales tax of 7 percent is collected when the merchandise is sold. The merchandise had a cost of $127,000. Provided a six-month warranty on the merchandise sold. Based on industry estimates, the warranty claims would amount to 4 percent of sales. Paid the sales tax to the state agency on $152,000 of the sales. On September 1, Year 1, borrowed $21,500 from the local bank. The note had a 5 percent interest rate and matured on March 1, Year 2. Paid $6,000 for warranty repairs during the year. Paid operating expenses of $55,500 for the year. Paid $124,300 of accounts payable. Recorded accrued interest on the note issued in transaction number 6. b1. Prepare the journal entries for the preceding transactions.b2. Post…
The following were selected from among the transactions completed by Caldemeyer Co. during the current year. Caldemeyer sells and installs home and business security systems. Jan. 3 Loaned $18,000 cash to Trina Gelhaus, receiving a 90-day, 8% note. Feb. 10 Sold merchandise on account to Bradford & Co., $24,000. The cost of the goods sold was $14,400. 13 Sold merchandise on account to Dry Creek Co., $60,000. The cost of goods sold was $54,000. Mar. 12 Accepted a 60-day, 7% note for $24,000 from Bradford & Co. on account. 14 Accepted a 60-day, 9% note for $60,000 from Dry Creek Co. on account. Apr. 3 Received the interest due from Trina Gelhaus and a new 120-day, 9% note as a renewal of the loan of January 3. (Record both the debit and the credit to the notes receivable account.) May 11 Received from Bradford & Co. the amount due on the note of March 12. 13 Dry Creek Co. dishonored its note dated March 14. July 12 Received from Dry Creek Co. the amount…
Geary Corporation had the following transactions: · Apr. 15 - Received $6,000 from Marion Company and signed a 60-day, eight percent note payable. · May 22 - Borrowed $50,000 from Sinclair Bank, signing a 60-day note at nine percent. · June 14 - Paid Marion Company the principal and interest due on the April 15th note payable. July 13 - Purchased $15,000 of merchandise from Sharp Company; signed a 90-day note with eight percent interest. July 21 - Paid the May 22 note due to Sinclair Bank. · Oct 02 - Borowed $38,000 from Sinclair Bank, signing a 120-day note at twelve percent interest. · Oct 11 - Paid the note payable and accrued interest to the Sharp Company (July 13). Required: 1. Record these transactions in a general journal format. 2. Record any adjusting entries for interest in a general journal format. Geary Corporation has a December 31 year-end.
Pomona, Inc., began business on January 1. Certain transactions for the year follow: Jun.8 Received a $30,000, 60 day, six percent note on account from R. Elliot. Aug.7 Received payment from R. Elliot on her note (principal plus interest). Sep.1 Received an $18,000, 120 day, seven percent note from B. Shore Company on account. Dec.16 Received a $14,400, 45 day, eight percent note from C. Judd on account. Dec.30 B. Shore Company failed to pay its note. Dec.31 Wrote off B. Shore’s account as uncollectible. Ponoma, Inc. uses the allowance method of providing for credit losses. Dec.31 Recorded expected credit losses for the year by an adjusting entry. Accounts written off during this first year have created a debit balance in the Allowance for Doubtful Accounts of $24,500. An analysis of aged receivables indicates that the desired balance of the allowance account should be $21,300. Dec.31 Made the appropriate adjusting entries for interest. RequiredRecord the…
The following transactions apply to Ozark Sales for Year 1: The business was started when the company received $50,000 from the issue of common stock. Purchased equipment inventory of $178,000 on account. Sold equipment for $192,000 cash (not including sales tax). Sales tax of 6 percent is collected when the merchandise is sold. The merchandise had a cost of $117,000. Provided a six-month warranty on the equipment sold. Based on industry estimates, the warranty claims would amount to 5 percent of sales. Paid the sales tax to the state agency on $142,000 of the sales. On September 1, Year 1, borrowed $21,500 from the local bank. The note had a 6 percent interest rate and matured on March 1, Year 2. Paid $5,900 for warranty repairs during the year. Paid operating expenses of $56,000 for the year. Paid $124,000 of accounts payable. Recorded accrued interest on the note issued in transaction no. 6. Required Record the given transactions in a horizontal statements model. Prepare the…
During Year 1, Ashkar Company ordered a machine on January 1 at an invoice price of $24,000. On the date of delivery. January 2, the company paid $8,000 on the machine, with the balance on credit at 11 percent interest due in six months. On January 3, it paid $800 for freight on the machine. On January 5, Ashkar paid installation costs relating to the machine amounting to $2,200. On July 1, the company paid the balance due on the machine plus the interest. On December 31 (the end of the accounting period), Ashkar recorded depreciation on the machine using the straight-line method with an estimated useful life of 10 years and an estimated residual value of $3,800. 3. Compute the depreciation expense to be reported for Year 1. Depreciation expense
On June 21, Marble Company purchased goods from Steel Company for $30,000, terms 2/10, n/30. The invoice was paid on June 27. The company uses a perpetual inventory system and records purchases gross. The June 27 journal entry to record payment of the account would include: Select one: a credit to Cash for $30,000. a credit to Inventory for $600. a credit to Purchases Discounts for $600. a debit to Accounts Payable for $29,400.