Zing Cell Phone Company entered into the following transactions involving curren
ID: 2609411 • Letter: Z
Question
Zing Cell Phone Company entered into the following transactions involving current liabilities during 2017 and 2018.
Purchased merchandise on credit from Ferris Inc. for $162,000. The terms were 1/10, n/30 (assume a perpetual inventory system).
Zing paid $36,000 cash and replaced the $126,000 remaining balance of the account payable to Ferris Inc. with a 5%, 60-day note payable.
Required:
1. Determine the maturity dates of the three notes just described.
2. Present journal entries for each of the preceding dates. (Use 365 days an year. Round your answers to 2 decimal places.)
1.Record the purchase of merchandise on credit.
2.Record the payment of cash and a note written to exchange due date.
3.Record the borrowing of cash with a 90-day against note.
4.Record the payment of note with interest.
5.Record the payment of note with interest.
6.Record the borrowing of cash with a 120-day note.
7.Record the accrued interest on note payable.
8.Record the payment of note with interest.
2017 Mar. 14Purchased merchandise on credit from Ferris Inc. for $162,000. The terms were 1/10, n/30 (assume a perpetual inventory system).
Apr. 14Zing paid $36,000 cash and replaced the $126,000 remaining balance of the account payable to Ferris Inc. with a 5%, 60-day note payable.
May 21 Borrowed $136,000 from Scotia Bank by signing a 4.5%, 90-day note. ? Paid the note to Ferris Inc. at maturity. ? Paid the note to Scotia Bank at maturity. Dec. 15 Borrowed $111,000 and signed a 5.25%, 120-day note with National Bank. Dec. 31 Recorded an adjusting entry for the accrual of interest on the note to National Bank. 2018 ? Paid the note to National Bank at maturity.Explanation / Answer
Maturity dates Ferris 13-Jun scotia bank 19-Aug National bank 14-Apr 14-Mar Merchandise 162000 Accounts payable 162000 14-Apr Accounts payable 162000 Cash 36000 Notes payable 126000 21-May Cash 136000 Notes payable 136000 13-Jun Notes payable 126000 Interest expense (126000*5%*60/365) 1035.62 Cash 127035.62 19-Aug Notes payable 136000 Interest expense (136000*4.5%*90/365) 1509.04 Cash 137509.04 15-Dec Cash 111000 Notes payable 111000 31-Dec Interest expense (111000*5.25%*16/365) 255.45 Interest payable 255.45 14-Apr Notes payable 111000 Interest payable 255.45 Interest expense (111000*5.25%*104/365) 1660.44 Cash 112915.89
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