Financial Accounting: The Impact on Decision Makers
10th Edition
ISBN: 9781305654174
Author: Gary A. Porter, Curtis L. Norton
Publisher: Cengage Learning
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Textbook Question
Chapter 9, Problem 9.4E
Transaction Analysis
Polly’s Cards $ Gifts Shop had the following transactions during the year:
- Polly’s purchased inventory on account from a supplier for $8,000. Assume that Polly’s uses a periodic inventory system.
- On May 1, land was purchased for $44,500. A 20% down payment was made, and an 18-month, 8% note was signed for the remainder.
- Polly’s returned $450 worth of inventory purchased in (a), which was found broken when the inventory was received.
- Polly’s paid the balance due on the purchase of inventory.
- On June 1, Polly signed a one-year, $15,000 note to First State Bank and received $13,800.
- Polly’s sold 200 gift certificates for $25 each for cash. Sales of gift certificates are recorded as a liability. At year-end, 35% of the gift certificates had been redeemed.
- Sales for the year were $120,000, of which 90% were for cash. State sales tax of 6% applied to all sales must be remitted to the state by January 31.
Required
- Record all necessary
journal entries relating to these transactions. - Assume that Polly’s accounting year ends on December 31. Prepare any necessary
adjusting journal entries. - What is the total of the current liabilities at the end of the year?
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Roger Company completed the following transactions during Year 1. Roger's fiscal year ends on December 31.
Jan. 8 Purchased merchandise for resale on account. The invoice amount was $14,860; assume
17 Paid January 8 invoice.
Apr. 1 Borrowed $35,000 from National Bank for general use; signed a 12-month, 8% annual interest-bearing note for the
a perpetual inventory system.
money.
June 3 Purchased merchandise for resale on account. The invoice amount was $17,420.
July 5 Paid June 3 invoice.
Aug. 1 Rented office space in one of Roger's buildings to another company and collected six months' rent in advance
amounting to $6,000.
Dec.20 Received a $100 deposit from a customer as
31 Determined wages of $9,500 were earned but not yet paid on December 31 (disregard payroll taxes).
a guarantee to return a trailer borrowed for 30 days.
Required:
1. For each transaction (including adjusting entries on December 31), indicate the effects (e.g., Cash + or -), using the following
schedule: (Indicate the…
Roger Company completed the following transactions during Year 1. Roger’s fiscal year ends on December 31.
Jan.
8
Purchased merchandise for resale on account. The invoice amount was $14,780; assume a perpetual inventory system.
17
Paid January 8 invoice.
Apr.
1
Borrowed $54,000 from National Bank for general use; signed a 12-month, 10% annual interest-bearing note for the money.
June
3
Purchased merchandise for resale on account. The invoice amount was $17,420.
July
5
Paid June 3 invoice.
Aug.
1
Rented office space in one of Roger’s buildings to another company and collected six months’ rent in advance amounting to $6,000.
Dec.
20
Received a $180 deposit from a customer as a guarantee to return a trailer borrowed for 30 days.
31
Determined wages of $9,200 were earned but not yet paid on December 31 (disregard payroll taxes).
Show how all of the liabilities arising from these transactions are reported on the balance sheet at December 31.…
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nces
Bryant Company sells a wide range of inventories, which are initially purchased on account. Occasionally, short-term notes payable are
used to obtain cash for current use. The following transactions were selected from those occurring during the year.
a. On January 10, purchased merchandise on credit for $21,000. The company uses a perpetual inventory system.
b. On March 1, borrowed $46,000 cash from City Bank and signed a promissory note with a face amount of $46,000, due at the end of
six months, accruing interest at an annual rate of 6.50 percent, payable at maturity,
Required:
1. For each of the transactions, indicate the accounts, amounts, and effects on the accounting equation
2. What amount of cast, is paid on the maturity date of the note?
3. Indicate the impact of each transaction (increase, decrease, and no effect) on the debt-to-assets ratio. Assume Bryant Company had
$360,000 in total liabilities and $560,000 in total assets, yielding a debt-to-assets ratio of 0.64,…
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- Roger Company completed the following transactions during Year 1. Roger's fiscal year ends on December 31. January 8 Purchased merchandise for resale on account. The invoice amount was $14,840; assume a perpetual inventory system. Paid January 8 invoice. Borrowed $60,000 from National Bank for general use; signed a 12-month, 13% annual interest-bearing note for the money. Purchased merchandise for resale on account. The invoice amount was $17,320. Paid June 3 invoice. Rented office space in one of Roger's buildings to another company and collected six months' rent in advance amounting to $21,000. December 20 Received a $240 deposit from a customer as a guarantee to return a trailer borrowed for 30 days. December 31 Determined wages of $10,400 were earned but not yet paid on December 31 (disregard payroll taxes). Required: January 17 April 1 June 3 July 5 August 1 1. Prepare journal entries for each of these transactions. 2. Prepare the adjusting entries required on December 31. 3. Show…arrow_forwardThe following are selected transactions of Vaughn Company. Vaughn prepares financial statements quarterly. Jan. 2 Purchased merchandise on account from Nunez Company, $40,000, terms 2/10, n/30. (Vaughn uses the perpetual inventory system.) Feb. 1 Issued a 9%, 2-month, $40,000 note to Nunez in payment of account. Mar. 31 Accrued interest for 2 months on Nunez note. Apr. 1 Paid face value and interest on Nunez note. July 1 Purchased equipment from Marson Equipment paying $10,500 in cash and signing a 10%, 3-month, $68,400 note. Sept. 30 Accrued interest for 3 months on Marson note. Oct. 1 Paid face value and interest on Marson note. Dec. 1 Borrowed $27,600 from the Paola Bank by issuing a 3-month, 8% note with a face value of $27,600. Dec. 31 Recognized interest expense for 1 month on Paola Bank note. 1.Prepare journal entries for the listed transactions and evenarrow_forwardThe 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., $396,000, terms n/30. 31 Issued a 30-day, 4% note for $396,000 to Kirkwood Co., on account. Apr. 30 Paid Kirkwood Co. the amount owed on the note of March 31. Jun. 1 Borrowed $174,000 from Triple Creek Bank, issuing a 45-day, 4% note. Jul. 1 Purchased tools by issuing a $258,000, 60-day note to Poulin Co., which discounted the note at the rate of 7%. 16 Paid Triple Creek Bank the interest due on the note of June 1 and renewed the loan by issuing a new 30-day, 6.5% note for $174,000. (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 $400,000, paying $114,000 cash and issuing a series of ten 4% notes…arrow_forward
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