The following items were selected from among the transactions completed by Sherwood Co. during the current year: Feb. 15. Purchased merchandise on account from Kirkwood Co., $144,000, terms n/30. Mar. 17. Issued a 60-day, 7% note for $144,000 to Kirkwood Co., on account. May 16. Paid Kirkwood Co. the amount owed on the note of March 17. June 15. Borrowed $154,800 from Triple Creek Bank, issuing a 60-day, 8% note. July 21. Purchased tools by issuing a $75,000, 90-day note to Poulin Co., which discounted the note at the rate of 9%. Aug. 14. Paid Triple Creek Bank the interest due on the note of June 15 and renewed the loan by issuing a new 60-day, 10% note for $154,800. (Journalize both the debit and credit to the notes payable account.) Oct. 13. Paid Triple Creek Bank the amount due on the note of August 14. Oct. 19. Paid Poulin Co. the amount due on the note of July 21. Dec. 1. Purchased office equipment from Greenwood Co. for $120,000, paying $20,000 cash and issuing a series of ten 6% notes for $10,000 each, coming due at 30-day intervals. Dec. 12. Settled a product liability lawsuit with a customer for $62,000, payable in January. Accrued the loss in a litigation claims payable account. Dec. 31. Paid the amount due to Greenwood Co. on the first note in the series issued on December 1. Required: 1. Journalize the transactions. If an amount box does not require an entry, leave it blank. Assume a 360-day year. If required, round to one decimal place. Don't round the intermediate calculations. For a compound transaction, accounts should be listed largest to smallest.
The following items were selected from among the transactions completed by Sherwood Co. during the current year: Feb. 15. Purchased merchandise on account from Kirkwood Co., $144,000, terms n/30. Mar. 17. Issued a 60-day, 7% note for $144,000 to Kirkwood Co., on account. May 16. Paid Kirkwood Co. the amount owed on the note of March 17. June 15. Borrowed $154,800 from Triple Creek Bank, issuing a 60-day, 8% note. July 21. Purchased tools by issuing a $75,000, 90-day note to Poulin Co., which discounted the note at the rate of 9%. Aug. 14. Paid Triple Creek Bank the interest due on the note of June 15 and renewed the loan by issuing a new 60-day, 10% note for $154,800. (Journalize both the debit and credit to the notes payable account.) Oct. 13. Paid Triple Creek Bank the amount due on the note of August 14. Oct. 19. Paid Poulin Co. the amount due on the note of July 21. Dec. 1. Purchased office equipment from Greenwood Co. for $120,000, paying $20,000 cash and issuing a series of ten 6% notes for $10,000 each, coming due at 30-day intervals. Dec. 12. Settled a product liability lawsuit with a customer for $62,000, payable in January. Accrued the loss in a litigation claims payable account. Dec. 31. Paid the amount due to Greenwood Co. on the first note in the series issued on December 1. Required: 1. Journalize the transactions. If an amount box does not require an entry, leave it blank. Assume a 360-day year. If required, round to one decimal place. Don't round the intermediate calculations. For a compound transaction, accounts should be listed largest to smallest.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Liability Transactions
The following items were selected from among the transactions completed by Sherwood Co. during the current year:
| Feb. 15. | Purchased merchandise on account from Kirkwood Co., $144,000, terms n/30. |
| Mar. 17. | Issued a 60-day, 7% note for $144,000 to Kirkwood Co., on account. |
| May 16. | Paid Kirkwood Co. the amount owed on the note of March 17. |
| June 15. | Borrowed $154,800 from Triple Creek Bank, issuing a 60-day, 8% note. |
| July 21. | Purchased tools by issuing a $75,000, 90-day note to Poulin Co., which discounted the note at the rate of 9%. |
| Aug. 14. | Paid Triple Creek Bank the interest due on the note of June 15 and renewed the loan by issuing a new 60-day, 10% note for $154,800. (Journalize both the debit and credit to the notes payable account.) |
| Oct. 13. | Paid Triple Creek Bank the amount due on the note of August 14. |
| Oct. 19. | Paid Poulin Co. the amount due on the note of July 21. |
| Dec. 1. | Purchased office equipment from Greenwood Co. for $120,000, paying $20,000 cash and issuing a series of ten 6% notes for $10,000 each, coming due at 30-day intervals. |
| Dec. 12. | Settled a product liability lawsuit with a customer for $62,000, payable in January. Accrued the loss in a litigation claims payable account. |
| Dec. 31. | Paid the amount due to Greenwood Co. on the first note in the series issued on December 1. |
Transcribed Image Text:The following items were selected from among the transactions completed by Sherwood Co. during the current year:
Feb. 15. Purchased merchandise on account from Kirkwood Co., $144,000, terms n/30.
Mar. 17. Issued a 60-day, 7% note for $144,000 to Kirkwood Co., on account.
May 16. Paid Kirkwood Co. the amount owed on the note of March 17.
June 15. Borrowed $154,800 from Triple Creek Bank, issuing a 60-day, 8% note.
July 21. Purchased tools by issuing a $75,000, 90-day note to Poulin Co., which discounted the note at the rate of 9%.
Aug. 14. Paid Triple Creek Bank the interest due on the note of June 15 and renewed the loan by issuing a new 60-day, 10%
note for $154,800. (Journalize both the debit and credit to the notes payable account.)
Oct. 13. Paid Triple Creek Bank the amount due on the note of August 14.
Oct. 19. Paid Poulin Co. the amount due on the note of July 21.
Dec. 1. Purchased office equipment from Greenwood Co. for $120,000, paying $20,000 cash and issuing a series of ten 6%
notes for $10,000 each, coming due at 30-day intervals.
Dec. 12. Settled a product liability lawsuit with a customer for $62,000, payable in January. Accrued the loss in a litigation
claims payable account.
Dec. 31. Paid the amount due to Greenwood Co. on the first note in the series issued on December 1.
Required:
1. Journalize the transactions. If an amount box does not require an entry, leave it blank. Assume a 360-day year. If required, round to one decimal place. Don't round
the intermediate calculations.
For a compound transaction, accounts should be listed largest to smallest.
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