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Sheffield Ltd. sells rock-climbing products and operates an indoor climbing facility for climbing enthusiasts. On July 1, 2024, Sheffield issued a three-month $25,200 note payable to Climbing Ropes Ltd. for some inventory it purchased due on September 30, 2024, and bearing interest at 6%. Principal and interest are payable at maturity. The company records adjusting entries annually at its year end, December 31. During the next four months, Sheffield incurred the following: Sept. 1 Purchased inventory on account for $28,200 from Black Diamond, terms n/30. The company uses a perpetual inventory system. 30 Repaid the $25,200 note payable to Climbing Ropes (see opening balance), as well as any interest owed. Oct. 1 2 Dec. 31 Issued a six-month, 8%, $28,200 note payable to Black Diamond in exchange for the account payable (see September 1 transaction). Interest is payable on maturity. Borrowed $90,000 cash from Montpelier Bank. The 3-year bank loan at 6% financed the building of a new climbing area for advanced climbers. Payments of $16,614 pertaining to both interest and principal are payable every 6 months on the first day, with the first payment on April 1. Recorded accrued interest for the Black Diamond note and the Montpelier loan. Sept. 1 Inventory Accounts Payable Sept. 30 Notes Payable 28,200 25,200 Interest Expense 1,512 Cash Oct. 1 Accounts Payable 28,200 Notes Payable Oct. 2 く Cash Bank Loan Payable Dec. 31 Interest Expense Dec. 31 Interest Payable (To record accrued interest for the Black Diamond note) Interest Expense Interest Payable (To record accrued interest for the Montpelier loan) 90,000 1,128 450 2 20 2 9

Sheffield Ltd. sells rock-climbing products and operates an indoor climbing facility for climbing enthusiasts. On July 1, 2024, Sheffield issued a three-month $25,200 note payable to Climbing Ropes Ltd. for some inventory it purchased due on September 30, 2024, and bearing interest at 6%. Principal and interest are payable at maturity. The company records adjusting entries annually at its year end, December 31. During the next four months, Sheffield incurred the following: Sept. 1 Purchased inventory on account for $28,200 from Black Diamond, terms n/30. The company uses a perpetual inventory system. 30 Repaid the $25,200 note payable to Climbing Ropes (see opening balance), as well as any interest owed. Oct. 1 2 Dec. 31 Issued a six-month, 8%, $28,200 note payable to Black Diamond in exchange for the account payable (see September 1 transaction). Interest is payable on maturity. Borrowed $90,000 cash from Montpelier Bank. The 3-year bank loan at 6% financed the building of a new climbing area for advanced climbers. Payments of $16,614 pertaining to both interest and principal are payable every 6 months on the first day, with the first payment on April 1. Recorded accrued interest for the Black Diamond note and the Montpelier loan. Sept. 1 Inventory Accounts Payable Sept. 30 Notes Payable 28,200 25,200 Interest Expense 1,512 Cash Oct. 1 Accounts Payable 28,200 Notes Payable Oct. 2 く Cash Bank Loan Payable Dec. 31 Interest Expense Dec. 31 Interest Payable (To record accrued interest for the Black Diamond note) Interest Expense Interest Payable (To record accrued interest for the Montpelier loan) 90,000 1,128 450 2 20 2 9

FINANCIAL ACCOUNTING
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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Sheffield Ltd. sells rock-climbing products and operates an indoor climbing facility for climbing enthusiasts. On July 1, 2024, Sheffield issued a three-month $25,200 note payable to Climbing Ropes Ltd. for some inventory it purchased due on September 30, 2024, and bearing interest at 6%. Principal and interest are payable at maturity. The company records adjusting entries annually at its year end, December 31. During the next four months, Sheffield incurred the following: Sept. 1 Purchased inventory on account for $28,200 from Black Diamond, terms n/30. The company uses a perpetual inventory system. 30 Repaid the $25,200 note payable to Climbing Ropes (see opening balance), as well as any interest owed. Oct. 1 2 Dec. 31 Issued a six-month, 8%, $28,200 note payable to Black Diamond in exchange for the account payable (see September 1 transaction). Interest is payable on maturity. Borrowed $90,000 cash from Montpelier Bank. The 3-year bank loan at 6% financed the building of a new climbing area for advanced climbers. Payments of $16,614 pertaining to both interest and principal are payable every 6 months on the first day, with the first payment on April 1. Recorded accrued interest for the Black Diamond note and the Montpelier loan.
Transcribed Image Text:Sheffield Ltd. sells rock-climbing products and operates an indoor climbing facility for climbing enthusiasts. On July 1, 2024, Sheffield issued a three-month $25,200 note payable to Climbing Ropes Ltd. for some inventory it purchased due on September 30, 2024, and bearing interest at 6%. Principal and interest are payable at maturity. The company records adjusting entries annually at its year end, December 31. During the next four months, Sheffield incurred the following: Sept. 1 Purchased inventory on account for $28,200 from Black Diamond, terms n/30. The company uses a perpetual inventory system. 30 Repaid the $25,200 note payable to Climbing Ropes (see opening balance), as well as any interest owed. Oct. 1 2 Dec. 31 Issued a six-month, 8%, $28,200 note payable to Black Diamond in exchange for the account payable (see September 1 transaction). Interest is payable on maturity. Borrowed $90,000 cash from Montpelier Bank. The 3-year bank loan at 6% financed the building of a new climbing area for advanced climbers. Payments of $16,614 pertaining to both interest and principal are payable every 6 months on the first day, with the first payment on April 1. Recorded accrued interest for the Black Diamond note and the Montpelier loan.
Sept. 1 Inventory Accounts Payable Sept. 30 Notes Payable 28,200 25,200 Interest Expense 1,512 Cash Oct. 1 Accounts Payable 28,200 Notes Payable Oct. 2 く Cash Bank Loan Payable Dec. 31 Interest Expense Dec. 31 Interest Payable (To record accrued interest for the Black Diamond note) Interest Expense Interest Payable (To record accrued interest for the Montpelier loan) 90,000 1,128 450 2 20 2 9
Transcribed Image Text:Sept. 1 Inventory Accounts Payable Sept. 30 Notes Payable 28,200 25,200 Interest Expense 1,512 Cash Oct. 1 Accounts Payable 28,200 Notes Payable Oct. 2 く Cash Bank Loan Payable Dec. 31 Interest Expense Dec. 31 Interest Payable (To record accrued interest for the Black Diamond note) Interest Expense Interest Payable (To record accrued interest for the Montpelier loan) 90,000 1,128 450 2 20 2 9
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