Homework #9(Chpt 10) Modest Tops for LDS Sister PA10-2 Recording and Reporting C

Question

Homework #9(Chpt 10) Modest Tops for LDS Sister PA10-2 Recording and Reporting Current Liabilities with Evaluation of Effects on the Debt-to Jack Hammer Company completed the following transactions. The annual accounting period ends December 31 Apr. 30 Received $735,000 from Commerce Bank after signing a 12-month,6 percent, promissory note. June 6 Purchased merchandise on account at a cost of $84,000. (Assume a perpetual inventory system.) July 15 Paid for the June 6 purchase. Aug. 31 Signed a contract to provide security service to a small apartment complex and collected six months' fees in advance amounting to $29,400. (Use an account called Uneamed Revenue.) Dec. 31 Determined salary and wages of $49,000 were eamed but not yet paid as of December 31 (ignore payroll taxes). Dec. 31 Adjusted the accounts at year-end, relating to interest Dec. 31 Adjusted the accounts at year-end, relating to security service. Required: 1&2 calcuiations. it no entry is required for a transactionlevent, select "No Journal Entry Required" in the first account field.) View transaction list 1 Record the borrowing of $735,000. 2 Record the purchase of inventory worth $84,000 on account. 3 Record the payment for inventory in full. 4 Record the collection of six month's security service fees in advance amounting to $29,400. s Record the wages earned, but not yet paid as of Credit December 31 6 Record the adjusting entry relating to interest 7 Record the adjusting entry relating to security service Note:journal entry has been entered Clear entry View general journal MacBook Pro esc

Explanation / Answer

Answer 1 & 2. Journal Entry Date Particulars Dr. Amt. Cr. Amt. 30-Apr Cash    735,000.00    Notes Payable    735,000.00 (To record the borrowings) 6-Jun Inventory      84,000.00    Accounts Payable      84,000.00 (Tor record the inventory purchased) 15-Jun Accounts Payable      84,000.00    Cash      84,000.00 (To record the cash paid) 31-Aug Cash      29,400.00    Unearned Revenue      29,400.00 (To record the revenue earned) 31-Dec Salary & Wages Expense      49,000.00    Salary & Wages Payable      49,000.00 (To record the salaries & wages expense) 31-Dec Interest Expense ($735,000 X 6% X 8/12)      29,400.00    Interest Payable      29,400.00 (To record the interest expense) 31-Dec Unearned Revenue ($29,400 X 4/6)      19,600.00    Security Service Revenue      19,600.00 (To record the service revenue earned) Answer 3. JACK HAMMER CO. Balance Sheet (partial) At Dec 31 Liabilities Current Liabilities Salaries & Wages Payable      49,000.00 Unearned Revenue        9,800.00 Interest Payable      29,400.00 Notes Payable    735,000.00    823,200.00 Long Term Liabilities                     -   Total Liabilities    823,200.00

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