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v2.cengagenow.com | CengageNOW v2 Online teaching and learning resource from Cengage Learning Search Textbook Solutions Chegg.com Chapter 10 Homework eBook Show Me How Calculator 3. BE.10-03 Liability Transactions 4. BE.10-04 The following items were selected from among the transactions completed by Emerald Bay Stores Co. during the current year: 5. BE.10-06 Feb. 15. Purchased merchandise on account from Hood Co., $144,000, terms n/30 Mar. 17, Issued a 60-day, 6% note for $144,000 to Hood Co., on account. May 16. Paid Hood Co. the amount owed on the note of March 17 June 15, Borrowed $142,800 from Acme Bank, issuing a 60-day, 7% note. July 21. Purchased tools by issuing a $120,000, 90-day note to Columbia Supply Co., which discounted the note at the rate of 6. EX.10-02.ALGO 7. EX.10-03.ALGO 8. EX.10-04 9. EX.10-06 10. EX.10-08 11. EX.10-11.ALGO 12. EX.10-12 13. EX.10-13.ALGO 14. EX.10-19 15. EX.10-22 ALGO 9%. Aug. 14, Paid Acme Bank the interest due on the noteune 15 and renewed the loan by issuing a new 60-day, 10% note for $142,800. (Journalize both the debit and credit to the notes payable account.) Oct. 13. Paid Acme Bank the amount due on the note of August 14. Oct. 19. Paid Columbia Supply Co. the amount due on the note of July 21 Dec. 1. Purchased office equipment from Mountain Equipment Co. for $96,000, paying $16,000 and issuing a series of ten 696 notes for $8,000 each, coming due at 30-day intervals. Dec. 12. Settled a product liability lawsuit with a customer for $58,000, payable in January. Emerald Bay accrued the loss in a litigation claims payable account. Dec. 31. Paid the amount due Mountain Equipment Co. on the first note in the series issued on December 1 Required: 1. Journalize the transactions. If an amount box does not require an entry, leave it blank. Assume a 360-day year. If required, round to one decimal place. Don't round the intermediate calculations. 16. PR.10-01 ALGO 17. PR.10-02B Check My Work 3 more Check My Work uses remaining. Previous Next Progress: 16/17 items Assignment Score: 75% All work saved Email Instructor Save and Exit Submit Assignment for Grading

Explanation / Answer

1) Journal Entry Date Account/Description Debit Credit Feb. 15 Merchandise Inventory 144,000       Accounts Payable—Hood Co 144,000 Mar. 17` Accounts Payable—Hood Co 144,000      6% Notes Payable 144,000 May.16      6% Notes Payable 144,000 Interest Expense ($144,000 * 60/360 * 6%) 1,440       Cash 145,440 Jun.15 Cash 142,800    7% Notes payable 142,800 Jul. 21 Tools 120,000 Interest expense (120,000* 90/360 *9%) 2,700      Notes payable 122,700 Aug. 14    7% Notes payable 142,800 Interest expenses (142800 * 60/360 * 7%) 1,666       10% Notes payable 142,800       Cash       1,666 Oct. 13       10% Notes payable 142,800 Interest Expense (142800 * 60/360 * 10%) 2,380       Cash 145,180 Oct. 19 Notes payable 122,700       Cash 122,700 Dec. 1 Office equipment 96,000       6% Notes payable 80,000        Cash 16,000 Dec. 12 Litigation loss 58,000        Litigation Claims payable 58,000 Dec. 31 Notes payable 8,000 Interest expense ($80,000 * 6% *30/360) 400         Cash 8,400 2) Account/Description Debit Credit a. Product warranty expense 14,800         Product warranty payable 14,800 b. Interest expense 360        Interest payable ($8000* 9 * 6% * 30/360) 360

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