Daniels Company engaged in the following transactions during 2020: a. Purchased $25,000 of merchandise from XYZ Supplies on January 26. Amount due in full on February 28. b. Paid for 40% of the purchased merchandise (Transaction a) on February 26. c. On February 28, negotiate a payment extension with XYZ for the remainder of the balance from the January 26 purchase by signing a 1-year, 8% note. d. Borrowed $500,000 on an 8-month, 9% interest-bearing note on July 31. e. Purchased $140,000 of merchandise on August 2. Amount due in full on September 30. f. Paid for the purchased merchandise (Transaction e) on September 28. g. Received from Martel Inc. on October 4, a $60,000 deposit against a total selling price of $600,000 for services to be performed for Martel. h. Paid quarterly installments of Social Security, Medicare, and individual income tax withholdings, as shown below, on October 10. The Social Security and Medicare were previously recorded as expenses during the quarter and the amounts paid represent both the employee and employer shares (50% each). Social Security taxes withheld $270,000 Medicare taxes withheld 65,492 Federal income taxes withheld 750,000 i. On December 15, Daniels completed the services ordered by Martel on October 4. Martel’s remaining balance of $540,000 is due on January 31. Required: 1. Prepare journal entries for these transactions. 2. Prepare any adjusting entries necessary at December 31, 2020.

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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Daniels Company engaged in the following transactions during 2020:

a.	Purchased $25,000 of merchandise from XYZ Supplies on January 26. Amount due in full on February 28.
b.	Paid for 40% of the purchased merchandise (Transaction a) on February 26.
c.	On February 28, negotiate a payment extension with XYZ for the remainder of the balance from the January 26 purchase by signing a 1-year, 8% note.
d.	Borrowed $500,000 on an 8-month, 9% interest-bearing note on July 31.
e.	Purchased $140,000 of merchandise on August 2. Amount due in full on September 30.
f.	Paid for the purchased merchandise (Transaction e) on September 28.
g.	Received from Martel Inc. on October 4, a $60,000 deposit against a total selling price of $600,000 for services to be performed for Martel.
h.	Paid quarterly installments of Social Security, Medicare, and individual income tax withholdings, as shown below, on October 10. The Social Security and Medicare were previously recorded as expenses during the quarter and the amounts paid represent both the employee and employer shares (50% each).

Social Security taxes withheld	$270,000
Medicare taxes withheld	65,492
Federal income taxes withheld	750,000

i.	On December 15, Daniels completed the services ordered by Martel on October 4. Martel’s remaining balance of $540,000 is due on January 31.

	Required:
1.	Prepare journal entries for these transactions.
2.	Prepare any adjusting entries necessary at December 31, 2020.

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