The following selected transactions of Johnson Motors Company were completed during the current accounting year ended December 31, 2019: March 1 – Borrowed $25,000 on a two-year, 8% interest-bearing note. Interest is paid annually in 2020 and 2021. April 1 – Borrowed cash and signed a $20,000, one-year, noninterest-bearing note. The note was discounted at an annual interest rate of 6%. June 1 – Purchased a truck with a list price of $33,000. Paid $3,000 cash and signed a $30,000, one-year, noninterest-bearing note. The market rate for this type of note is 10%. The truck will be depreciated over five years using the straight-line method. The estimated salvage value is $5,000. September 1 - Sold $6,000 of gift cards. October 1 – Sold merchandise of $30,000 for cash. Gift cards of $2,000 were redeemed. The cost of the merchandise was $16,000. The merchandise carries a two-year warranty for parts and labor. A reasonable estimate of the cost of the warranty is 1.5% of sales revenue. December 31 - $20,000 cash dividends were declared. The dividends will be paid in 2020. Instructions: Prepare the 2019 journal entries required to record the preceding transactions, along with any required adjusting entries. (Round answers to the nearest dollar)
The following selected transactions of Johnson Motors Company were completed during the current accounting year ended December 31, 2019:
March 1 – Borrowed $25,000 on a two-year, 8% interest-bearing note. Interest is paid annually in 2020 and 2021.
April 1 – Borrowed cash and signed a $20,000, one-year, noninterest-bearing note. The note was discounted at an annual interest rate of 6%.
June 1 – Purchased a truck with a list price of $33,000. Paid $3,000 cash and signed a $30,000, one-year, noninterest-bearing note. The market rate for this type of note is 10%. The truck will be
September 1 - Sold $6,000 of gift cards.
October 1 – Sold merchandise of $30,000 for cash. Gift cards of $2,000 were redeemed. The cost of the merchandise was $16,000. The merchandise carries a two-year warranty for parts and labor. A reasonable estimate of the cost of the warranty is 1.5% of sales revenue.
December 31 - $20,000 cash dividends were declared. The dividends will be paid in 2020.
Instructions: Prepare the 2019
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