Problem 10-2A The following are selected transactions of Graves Company. Graves
ID: 2452511 • Letter: P
Question
Problem 10-2A The following are selected transactions of Graves Company. Graves prepares financial statements quarterly. Jan. 2 Purchased merchandise on account from Ally Company, $33,975, terms 3/10, n/30. (Graves uses the perpetual inventory system.) Feb. 1 Issued a 6%, 2-month, $33,975 note to Ally in payment of account. Mar. 31 Accrued interest for 2 months on Ally note. Apr. 1 Paid face value and interest on Ally note. July 1 Purchased equipment from Clark Equipment paying $13,380 in cash and signing a 7%, 3-month, $42,680 note. Sept. 30 Accrued interest for 3 months on Clark note. Oct. 1 Paid face value and interest on Clark note. Dec. 1 Borrowed $22,500 from the Jonas Bank by issuing a 3-month, 6% note with a face value of $22,500. Dec. 31 Recognized interest expense for 1 month on Jonas Bank note.
Graves Company
Balance Sheet
December 31
SHOW LIST OF ACCOUNTS
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Show the balance sheet presentation of notes and interest payable at December 31.Graves Company
Balance Sheet
December 31
$
$
SHOW LIST OF ACCOUNTS
LINK TO TEXT
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Explanation / Answer
(a) Jan. 2 Merchandise Inventory or
Purchases.................................................................. 33975
Accounts Payable............................................... 33975
Feb. 1 Accounts Payable......................................................... 33975
Notes Payable...................................................... 33975
Mar. 31 Interest Expense........................................................... 340
($33975 X 6% X 2/12)
Interest Payable.................................................. 340
Apr. 1 Notes Payable................................................................ 33975
Interest Payable............................................................ 340
Cash..................................................................... 34375
July 1 Equipment..................................................................... 56060
Cash..................................................................... 13380
Notes Payable...................................................... 42680
Sept. 30 Interest Expense........................................................... 747
(42680 X 7% X 3/12)
Interest Payable.................................................. 747
Oct. 1 Notes Payable................................................................ 42680
Interest Payable............................................................ 747
Cash..................................................................... 43427
Dec. 1 Cash…………………………………………………… 22500
Notes Payable...................................................... 22500
Dec. 31 Interest Expense........................................................... 113
($22500 X 6% X 1/12)
Interest Payable.................................................. 113
(b)
Notes Payable
4/1 33975
10/1 42680
2/1 33975
7/1 42680
12/1 22500
12/31 Bal. 22500
Interest Payable
4/1 340
10/1 747
3/31 340
9/30 747
12/31 113
12/31 Bal. 113
Interest Expense
3/31 340
9/30 747
12/31 113
12/31 Bal. 1200
(c) Current liabilities
Notes payable..................................................................................... $22500
Interest payable................................................................................ 113 $22613
(d) Total interest is $1200 ( 340+747+113)
Notes Payable
4/1 33975
10/1 42680
2/1 33975
7/1 42680
12/1 22500
12/31 Bal. 22500
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