The following items were selected from among the transactions completed by Pione
ID: 2471911 • Letter: T
Question
The following items were selected from among the transactions completed by Pioneer Co. during the current year:
Chart of Accounts
Journal
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
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PAGE 12
JOURNAL
1
Adjusting Entries
2
3
4
5
Mar. 1 Purchased merchandise on account from Galston Co., $372,000, terms n/30. 31 Issued a 30-day, 4% note for $372,000 to Galston Co., on account. Apr. 30 Paid Galston Co. the amount owed on the note of March 31. Jun. 1 Borrowed $150,000 from Pilati Bank, issuing a 45-day, 8% note. Jul. 1 Purchased tools by issuing a $276,000, 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 $150,000. (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 $540,000, paying $108,000 and issuing a series of ten 4% notes for $43,200 each, coming due at 30-day intervals. 22 Settled a product liability lawsuit with a customer for $309,500, 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.Explanation / Answer
PAGE 11 JOURNAL
DATE
DESCRIPTION
POST. REF.
DEBIT
CREDIT
Mar 1
115 Merchandise Inventory A/c Dr.
$372,000
To 210 Accounts Payable – Galston Co. A/c
$372,000
(Purchase Inventory on Account)
Mar 31
210 Accounts Payable-Galston Co. A/c Dr.
$372,000
To 214 Notes Payable A/c
$372,000
(Issued a 30 – day, 4% Note to Galston Co)
Apr 30
214 Notes Payable A/c Dr.
$372,000
710 Interest Expense A/c Dr.
$ 1,240
To 110 Cash A/c
$ 1,240
(Paid Notes owed to Galston co with interest on due date)
Jun 1
110 Cash A/c Dr.
$150,000
To 214 Notes Payable A/c
$150,000
(Borrowed money from Pilati Bank and issued a 45-day, 8% note)
Jul 1
127 Tools A/c Dr.
$276,000
To 214 Notes Payable A/c
$276,000
(Purchased tools by issuing 60-day, 6% note to Zegna Co.)
Jul 16
214 Notes Payable A/c Dr.
$150,000
710 Interest Expense A/c Dr.
$ 1,500
To 110 Cash A/c
$ 1,500
To 214 Notes Payable A/c
$150,000
(Paid the interest due on old note and renewed the loan by issuing 30- day, 6.5% Note)
Aug 15
214 Notes Payable A/c Dr.
$150,000
710 Interest Expense A/c Dr.
$ 813
To 110 Cash A/c
$150,813
(Paid the amount due on notes payable to Pilati Bank)
Aug 30
214 Notes Payable A/c Dr.
$276,000
710 Interest Expense A/c Dr.
$ 2,760
To 110 Cash A/c
$278,760
(Paid the amount due on notes payable to Zegna Co)
Dec 1
125 Office Equipment A/c Dr.
$540,000
To 110 Cash A/c
$108,000
To 214 Notes Payable A/c
$432,000
(Purchased office equipment and paid cash $108,000 and issued a series of ten 4% notes of $43,200 each, due at 30-day interval
Dec 22
229 Litigation Claims Payable A/c Dr.
$309,500
To 110 Cash A/c
$309,500
(Settled the product liability law suit)
Dec 31
214 Notes Payable A/c Dr.
$ 43,200
710 Interest Expense A/c Dr.
$ 144
To 110 Cash A/c
$ 43,344
(Paid the amount due on first note payable in the series)
Apr 30 – Interest on 30 - day 4% Note payable is ($372,000 * 4%)/360 *30 = $1,240
Jul 16 – Interest on 45-day, 8% note payable is ($150,000 * 8%)/360 * 45 = $1,500
Aug 15 – Interest on 30-day, 6.5% note payable is ($150,000 * 6.5%)/360 * 30 = $813 (Rounded off to nearest dollar)
Aug 30 – Interest on 60-day, 6% note payable is ($276,000 * 6%)/360 * 60 = $2,760
Dec 31, Interest on 30 – day, 4% note payable is ($43,200 * 4%)/360 * 30 = $144
PAGE 12 JOURNAL
DATE
DESCRIPTION
POST. REF.
DEBIT
CREDIT
Dec 31
540 Product Warranty Expense A/c Dr.
$ 28,000
To 228 Product Warranty Payable A/c
$ 28,000
(Product Warranty cost for the year)
Dec 31
710 Interest Expense A/c Dr.
$ 1,296
To 213 Interest Payable A/c
$ 1,296
(Interest accrued on nine remaining notes payable)
Out of series of 10, one note payable of $43,200 is repaid. So another nine $43,200 notes payable are due. Interest to be accrued on these 9 notes payables. ($43,200 * 9 * 4%)/360 * 30 = $1,296. Interest is accrued for 30 days as the notes are issued on Dec 1
DATE
DESCRIPTION
POST. REF.
DEBIT
CREDIT
Mar 1
115 Merchandise Inventory A/c Dr.
$372,000
To 210 Accounts Payable – Galston Co. A/c
$372,000
(Purchase Inventory on Account)
Mar 31
210 Accounts Payable-Galston Co. A/c Dr.
$372,000
To 214 Notes Payable A/c
$372,000
(Issued a 30 – day, 4% Note to Galston Co)
Apr 30
214 Notes Payable A/c Dr.
$372,000
710 Interest Expense A/c Dr.
$ 1,240
To 110 Cash A/c
$ 1,240
(Paid Notes owed to Galston co with interest on due date)
Jun 1
110 Cash A/c Dr.
$150,000
To 214 Notes Payable A/c
$150,000
(Borrowed money from Pilati Bank and issued a 45-day, 8% note)
Jul 1
127 Tools A/c Dr.
$276,000
To 214 Notes Payable A/c
$276,000
(Purchased tools by issuing 60-day, 6% note to Zegna Co.)
Jul 16
214 Notes Payable A/c Dr.
$150,000
710 Interest Expense A/c Dr.
$ 1,500
To 110 Cash A/c
$ 1,500
To 214 Notes Payable A/c
$150,000
(Paid the interest due on old note and renewed the loan by issuing 30- day, 6.5% Note)
Aug 15
214 Notes Payable A/c Dr.
$150,000
710 Interest Expense A/c Dr.
$ 813
To 110 Cash A/c
$150,813
(Paid the amount due on notes payable to Pilati Bank)
Aug 30
214 Notes Payable A/c Dr.
$276,000
710 Interest Expense A/c Dr.
$ 2,760
To 110 Cash A/c
$278,760
(Paid the amount due on notes payable to Zegna Co)
Dec 1
125 Office Equipment A/c Dr.
$540,000
To 110 Cash A/c
$108,000
To 214 Notes Payable A/c
$432,000
(Purchased office equipment and paid cash $108,000 and issued a series of ten 4% notes of $43,200 each, due at 30-day interval
Dec 22
229 Litigation Claims Payable A/c Dr.
$309,500
To 110 Cash A/c
$309,500
(Settled the product liability law suit)
Dec 31
214 Notes Payable A/c Dr.
$ 43,200
710 Interest Expense A/c Dr.
$ 144
To 110 Cash A/c
$ 43,344
(Paid the amount due on first note payable in the series)
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