Problem 10-2A The following are selected transactions of Swifty Corporation. Swi

Question

Problem 10-2A The following are selected transactions of Swifty Corporation. Swifty prepares financial statements quarterly Jan. 2 Purchased merchandise on account from Nunez Company, $21,600, terms 3/10, n/30. (Swifty uses the perpetual inventory system.) Feb. 1 Issued a 996, 2-month, $21,600 note to Nunez in payment of account. Mar. 31 Accrued interest for 2 months on Nunez note. Apr. 1 Paid face value and interest on Nunez note July 1 Purchased equipment from Marson Equipment paying $10,400 in cash and signing a 10%, 3-month, $70,800 note Sept.30 Accrued interest for 3 months on Marson note Oct. 1 Paid face value and interest on Marson note Dec. 1 Borrowed $27,600 from the Paola Bank by issuing a 3-month, 8% note with a face value of $27,600 Dec. 31 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 journal entries in the order presented in the problem.) Date Account Titles and Explanation Debit Credit

Explanation / Answer

a) Journal Entries :-

b) T - Accounts

Notes Payable :-

Interest Payable :-

Interest Expense :-

c) Balance Sheet :-

d) Total Interest = $324+$1770+$552 = $2646

Date Particulars Debit($) Credit($) Jan. 2 Purchase A/c Dr. 21600 To Accounts Payable A/c 21600 Feb. 1 Accounts Payable A/c Dr. 21600 To Notes Payables A/c 21600 Mar. 31 Interest Expense A/c Dr. ($21600*9%*(2/12)) 324 To Interest Payable A/c 324 Apr. 1 Notes Payable A/c Dr. 21600 Interest Payable A/c Dr. 324 To Cash A/c 21924 Jul. 1 Equipment A/c Dr. 81200 To Cash A/c 10400 To Notes Payables A/c 70800 Sep. 30 Interest Expense A/c Dr. ($70800*10%*(3/12)) 1770 To Interest Payable A/c 1770 Oct. 1 Notes Payable A/c Dr. 70800 Interest Payable A/c Dr. 1770 To Cash A/c 72570 Dec. 1 Cash A/c Dr. 27600 To Notes Payable A/c 27600 Dec. 31 Interest Expense A/c Dr. ($27600*8%*(3/12)) 552 To Interest Payable A/c 552

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