(a) Date Account Titles and Explanation Debit Credit February 2 February 26 Apri
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Question
(a)
Date
Account Titles and Explanation
Debit
Credit
February 2
February 26
April 1
May 1
August 1
September 10
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(b)
Edwardson Corporation’s year-end is December 31. Assuming that no adjusting entries relative to the transactions above have been recorded, prepare any adjusting journal entries concerning interest that are necessary to present fair financial statements at December 31. Assume straight-line amortization of discounts (THERES FOUR ADJUSTING ENTRIES HELP)
Described below are certain transactions of Edwardson Corporation. The company uses the periodic inventory system.1. On February 2, the corporation purchased goods from Martin Company for $82,800 subject to cash discount terms of 3/10, n/30. Purchases and accounts payable are recorded by the corporation at net amounts after cash discounts. The invoice was paid on February 26. 2. On April 1, the corporation bought a truck for $56,000 from General Motors Company, paying $2,000 in cash and signing a one-year, 12% note for the balance of the purchase price. 3. On May 1, the corporation borrowed $126,000 from Chicago National Bank by signing a $135,840 zero-interest-bearing note due one year from May 1. 4. On August 1, the board of directors declared a $316,400 cash dividend that was payable on September 10 to stockholders of record on August 31.
Explanation / Answer
316400
Date Title Debit credit Feb 2 Purchase 80316 Accounts payable 80316 [Being purchase made and discount recorded 82800(1-.03)] feb 26 Accounts payable 80316 purchase discount lost [82800*.03] 2484 cash 82800 [Being payment made after 10 days (discount period )and discountlost recorded] Apr 1 Truck 56000 cash 2000 Note payable 54000 [being truck purchased by paying partly in cash and partly by issuing note] may 1 cash 126,000 Interest expense 9840 Note payable 135840 Aug 1 cash Dividend /Retained earnings 316400 Dividend payable316400
[being dividend declared] sep 10 Dividend payable 316400 cash 316400 [being dividend paid]Related Questions
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