During the past two years the following selected transactions occurred for Bass

Question

During the past two years the following selected transactions occurred for Bass Boats Inc.:

Year 1
5-Jan Purchased equipment for $100,000, signing a 9 month, 6% note Payable.
26-Jan Recorded the week's sales of $75,000, 70% on account and 30% cash. All sales are subject to a 6 1/2% sales tax.
7-Feb Remitted last week's sales tax to the appropriate government agency.
1-May Borrowed $150,000 on a 6 year, 8% note payable calling for annual interest payments beginning next May 1.
5-Oct Paid off the January 5 note payable.
30-Nov Purchased inventory at a cost of $7,200, signing a 3-month, 8% note payable for that amount.
31-Dec Accrued warranty expense is estimated at 3% of total sales of $1,000,000.
31-Dec Record accrued interest on all outstanding notes payable (make a separate journal entry for each).
Year 2
28-Feb Paid off the 8% inventory note plus interest at maturity
1-May Paid the interest for one year on the long-term note payable.


Requirements:

1 Record the transactions in the journal. Omit explanations.
Journal
Date Accounts Post. Ref Debit Credit
5 Jan

How do I enter this in to a balance sheet?

Explanation / Answer

Year 1 Jan 5 Debit Equipment 100,000 Credit Short-term Notes Payable 100,000 Jan 26 Debit Cash 23,962.50 (22,500 x 1.065) Debit Accounts Receivable 55,912.50 (52,500 x 1.065) Credit Sales 75,000 Credit Sales Tax Payable 4,875.00 (75,000 x .065) Feb 7 Debit Sales Tax Payable 4,875.00 Credit Cash 4,875.00 May 1 Debit Cash 150,000 Credit Long-term Notes Payable 150,000 Oct 5 Debit Interest Expense 9,000 (100,000 x 9%) Debit Short-term Notes Payable 100,000 Credit Cash 109,000 Nov 30 Debit Purchases 7,200 Credit Short-term Notes Payable 7,200 Dec 31 Debit Warranty Expense 30,000 (1,000,000 x 3%) Credit Estimated Warranty Liability 30,000 Dec 31 Long-term Note Debit Interest Expense 8,000 (150,000 x 8% x 8/12) Credit Interest Payable 8,000 Dec 31 Inventory Note Debit Interest Expense 48 (7,200 x 8% x 1/12) Credit Interest Payable 48 Year 2 Feb 28 Debit Interest Payable 48 Debit Interest Expense 96 (7,200 x 8% x 2/12) Debit Short-term Notes Payable 7,200 Credit Cash 7,344 May 1 Debit Interest Payable 8,000 Debit Interest Expense 4,000 (150,000 x 8% x 4/12) Credit Cash 12,000

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