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The following items were selected from among the transactions completed by Pione

ID: 2467635 • Letter: T

Question

The following items were selected from among the transactions completed by Pioneer Co. during the current year:

Mar.

1

Purchased merchandise on account from Galston Co., $366,000, terms n/30.

31

Issued a 30-day, 6% note for $366,000 to Galston Co., on account.

Apr.

30

Paid Galston Co. the amount owed on the note of March 31.

Jun.

1

Borrowed $198,000 from Pilati Bank, issuing a 45-day, 8% note.

Jul.

1

Purchased tools by issuing a $270,000, 60-day note to Zegna Co., which discounted the note at the rate of 6%.

16

Paid Pilati Bank the interest due on the note of June 1 and renewed the loan by issuing a new 30-day, 6.5% note for $198,000. (Journalize both the debit and credit to the notes payable account.)

Aug.

15

Paid Pilati Bank the amount due on the note of July 16.

30

Paid Zegna Co. the amount due on the note of July 1.

Dec.

1

Purchased office equipment from Taylor Co. for $400,000, paying $108,000 and issuing a series of ten 8% notes for $29,200 each, coming due at 30-day intervals.

22

Settled a product liability lawsuit with a customer for $320,000, payable in January. Pioneer accrued the loss in a litigation claims payable account.

31

Paid the amount due Taylor Co. on the first note in the series issued on December 1.

Required:

1.

Journalize the transactions. Refer to the Chart of Accounts for exact wording of account titles. Assume a 360-day year. Round your answers to the nearest dollar.

2.

Journalize the adjusting entry for each of the following accrued expenses at the end of the current year (refer to the Chart of Accounts for exact wording of account titles):

A.

Product warranty cost, $29,000.

B.

Interest on the nine remaining notes owed to Taylor Co. Assume a 360-day year.

CHART OF ACCOUNTS

Pioneer Co.

General Ledger

ASSETS

110

Cash

111

Accounts Receivable

112

Interest Receivable

113

Notes Receivable

115

Merchandise Inventory

116

Supplies

118

Prepaid Insurance

120

Land

123

Building

124

Accumulated Depreciation-Building

125

Office Equipment

126

Accumulated Depreciation-Office Equipment

127

Tools

128

Accumulated Depreciation-Tools

LIABILITIES

210

Accounts Payable-Galston Co.

211

Accounts Payable-Taylor Co.

212

Accounts Payable-Zegna Co.

213

Interest Payable

214

Notes Payable

215

Salaries Payable

216

Social Security Tax Payable

217

Medicare Tax Payable

218

Employees Federal Income Tax Payable

219

Employees State Income Tax Payable

220

Group Insurance Payable

221

Bond Deductions Payable

224

Federal Unemployment Tax Payable

225

State Unemployment Tax Payable

226

Vacation Pay Payable

227

Unfunded Pension Liability

228

Product Warranty Payable

229

Litigation Claims Payable

EQUITY

310

Owner, Capital

311

Owner, Drawing

312

Income Summary

REVENUE

410

Sales

610

Interest Revenue

EXPENSES

510

Cost of Merchandise Sold

520

Salaries Expense

524

Depreciation Expense-Building

525

Delivery Expense

526

Repairs Expense

529

Selling Expenses

531

Rent Expense

532

Depreciation Expense-Office Equipment

533

Depreciation Expense-Tools

534

Insurance Expense

535

Supplies Expense

536

Payroll Tax Expense

537

Vacation Pay Expense

538

Pension Expense

539

Cash Short and Over

540

Product Warranty Expense

541

Miscellaneous Expense

710

Interest Expense

720

Litigation L

1. Journalize the transactions. Refer to the Chart of Accounts for exact wording of account titles. Assume a 360-day year. Scroll down to access page 12 of the journal. Round your answers to the nearest dollar.

PAGE 11

JOURNAL

DATE

DESCRIPTION

POST. REF.

DEBIT

CREDIT

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

29

2.

Journalize the adjusting entry for each of the following accrued expenses at the end of the current year (refer to the Chart of Accounts for exact wording of account titles):

A.

Product warranty cost, $29,000.

B.

Interest on the nine remaining notes owed to Taylor Co. Assume a 360-day year.

Mar.

1

Purchased merchandise on account from Galston Co., $366,000, terms n/30.

31

Issued a 30-day, 6% note for $366,000 to Galston Co., on account.

Apr.

30

Paid Galston Co. the amount owed on the note of March 31.

Jun.

1

Borrowed $198,000 from Pilati Bank, issuing a 45-day, 8% note.

Jul.

1

Purchased tools by issuing a $270,000, 60-day note to Zegna Co., which discounted the note at the rate of 6%.

16

Paid Pilati Bank the interest due on the note of June 1 and renewed the loan by issuing a new 30-day, 6.5% note for $198,000. (Journalize both the debit and credit to the notes payable account.)

Aug.

15

Paid Pilati Bank the amount due on the note of July 16.

30

Paid Zegna Co. the amount due on the note of July 1.

Dec.

1

Purchased office equipment from Taylor Co. for $400,000, paying $108,000 and issuing a series of ten 8% notes for $29,200 each, coming due at 30-day intervals.

22

Settled a product liability lawsuit with a customer for $320,000, payable in January. Pioneer accrued the loss in a litigation claims payable account.

31

Paid the amount due Taylor Co. on the first note in the series issued on December 1.

Required:

1.

Journalize the transactions. Refer to the Chart of Accounts for exact wording of account titles. Assume a 360-day year. Round your answers to the nearest dollar.

2.

Journalize the adjusting entry for each of the following accrued expenses at the end of the current year (refer to the Chart of Accounts for exact wording of account titles):

A.

Product warranty cost, $29,000.

B.

Interest on the nine remaining notes owed to Taylor Co. Assume a 360-day year.

Explanation / Answer

S.No Date Particulars Post Ref Debit Credit 1 mar-1 Sale (Galstone) 366,000 Account Payable (Galstone) 366,000 Mar-31 Note Payable 366,000 Interest Payable 21,960 sale 387,960 Apr-30 Note Payable 366,000 Interest Payable 21,960 Cash 387,960 June-1 Note payable (bank borrowing) 198,000 Interest payable (8%) 15,840 Bank account 213840 July-1 Tools (Purchase) 270,000 Account payable (zegna ) 270,000 Account payable (zegna 6% discount) 253,800 Note payable 253,800 July-16 Interest Expense 15,840 Cash 15,840 Interest payable (6.5%) 11,880 Bank account 11,880 Aug-15 Interest expense 11,880 Cash 11,880 Aug-30 Note Payable 253,800 cash 253,800 Dec-1 Office equipmet (Taylor.co) 400,000 cash 108,000 Notes Payable (29,200*10) 292,000 Interest Payable (29,200*8% *10) 23360 Notes Payable 23360 dec-22 Litigation claims payable 320,000 Litigation 320,000 Dec-31 Note Payable 2336 cash 2336 Product Warrenty Payable 29,000 cash 29,000 Notes Payable 21024 Office equipment 21024