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The following selected transactions relate to liabilities of Interstate Farm Imp

ID: 2411788 • Letter: T

Question

The following selected transactions relate to liabilities of Interstate Farm Implements for December of 2018. Interstate’s fiscal year ends on December 31. Required: Prepare the appropriate journal entries for these transactions.

1. On December 15, received $11,500 from Bradley Farms toward the purchase of a $149,500 tractor to be delivered on January 6, 2019. 2. During December, received $42,000 of refundable deposits relating to containers used to transport equipment parts. 3. During December, credit sales totaled $836,000. The state sales tax rate is 5% and the local sales tax rate is 2%. (This is a summary journal entry for the many individual sales transactions for the period.)

Explanation / Answer

Ans JOURNAL ENTRIES

  

(BEING REFUNDABLE DEPOSITS RECEIVED)

(BEING SALES MADE TO CUSTOMER / DEBTOR )

NOTES : 1. SINCE FOR ENTRY 2 AND ENTRY 3 DATE OF ENTRY IS NOT MENTIONED HENCE , FOR THOSE TRANSACTIONS WE HAVE MADE ENTRY IN 31ST DECEMBER .

2. FOR ENTRY 3 WHERE CREDIT SALES IS MADE WE HAVE MADE TAX CALCULATIONS ON RS 836000 . CUSTOMER ACCOUNT IS DEBITED WITH TAX 894520 WHICH INCLUDES STATE SALES TAX RS 41800(836000*0.05) AND LOCAL SALES TAX RS 16720 (836000*0.02)

DATE PARTICULARS DEBIT CREDIT DEC 15 BANK A/C DR 11500 TO ADVANCE RECEIVED ON TRACTOR 1500 (BEING ADVANCE RECEIVED FOR THE TRACTOR) DEC 31 BANK A/C DR 42000 TO DEPOSITS A/C 42000
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