The following are selected transactions of Blanco Company. Blanco prepares finan
ID: 2481247 • Letter: T
Question
The following are selected transactions of Blanco Company. Blanco prepares financial statements quarterly. Purchased merchandise on account from Nunez Company, $33,600, terms 3/10, n/30. (Blanco uses the perpetual inventory system.) Issued a 9%, 2-month, $33,600 note to Nunez in payment of account. Accrued interest for 2 months on Nunez note. Paid face value and interest on Nunez note. Purchased equipment from Marson Equipment paymo $11,800 in cash and signing a10%, 3-month, $52,800 note. Accrued interest for 3 months on Marson note. Paid face value and interest on Marson note. Borrowed $31, 200 from the Paola Bank by issuing a 3-month, 8% note with a face value of $31, 200. Recognized interest expense for 1 month on Paola Bank note. Prepare journal entries for the listed transactions and events. (Credit account titles are automatically Indented when amount Is entered. Do not indent manually. Record journaI entries in the order presented in the problem.)Explanation / Answer
Answer:(a) Journal entry
2 jan Merchandise Inventory A/C Dr. $33600
To Accounts Payable A/C $33600
1 Feb Accounts Payable A/C Dr. $33600
To Notes Payable A/C $33600
31 Mar Interest expense A/C Dr. $504
To Interest Payable A/C $504
(33600*9%*2/12)
1 Apr. Notes Payable A/C Dr. $33600
Interest Payable A/C Dr. $504
To cash A/C $34104
1 July Equipment A/C Dr. $64600
To cash A/C $11800
To Notes Payable A/C $52800
30 sept Interest expense A/C Dr. $1320
To Interest Payable A/C $1320
(52800*10%*3/12)
1 Oct. Notes Payable A/C Dr. $52800
Interest Payable A/C Dr. $1320
To cash A/C $54120
1 Dec Cash A/C Dr. $31200
To Notes Payable A/C $31200
31 Dec Interest expense A/C Dr. $208
To Interest Payable A/C $208
(31200*8%*1/12)
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