(20 PontTS P.1 (Learning Objective 1:Revord hability-related transactions) The f
ID: 2593877 • Letter: #
Question
(20 PontTS P.1 (Learning Objective 1:Revord hability-related transactions) The following transactions of Concerto Music Company occurred during 2014 and 2015 2014 Mar 3 ntrehasod a pia no timorory, far 572,000, signing a six-month, 4% note payable Borrowed SSS000 os a 5% neic payable that call, tor annual-tallinn May 31 payubunts of $17,000 principal plus interest. Record the shon-serm uone payable in a separate accouot froa the long-term noee payable Paid the six-mmash, 4%mets at tna ority. Accrued warranty expense, which n estimated at 2% of sales of Si 4,000. Sep 3 Dec 31 31 Accraed interest an the ourtanding note payable. 2015 Msy 31 Paid the first iantallment and insenest far one year ou the oustamding nese payable 1. Record the transactions in Concerto Music Company's journal. Explanations are not required. Journal DEBIT CREDIT ACCOUNT TITLES AND EXPLANATIONExplanation / Answer
Solution :
Date Account title. Debit. ($) Credit($)
2014
Mar 3. Inventory account. 72,000
Notes payable Short term 72,000
May 31. Cash. 85,000
Note payable short term. 17000
Note payable long term. 68000
Sep 3. Note payable short term. 72000
Interest expense. 1440 ( $72,000*4%*6/12)
Cash. 73440
Dec 31. Warranty expense 4280 ( $ 214,000*2%)
Estimated warranty expense. 4280
Dec 31. Interest expense 2479 ($85000*5%*7/12)
Interest payable. 2479
( from May to Dec 7 months )
2015
May 31. Note payable short term. 17000
Interest payable. 2479
Interest expense 1771($85,000*5%*5/12)
Cash. 21250
( from Dec '14 to May' 15 5 months )
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