Accounting for several current liabilities (Learning Objectives 2 & 3)

20–25 min.

The following transactions of Dalton’s Marine Supply occurred during 2014 and 2015:

2014 Feb 3 28 Mar 7 Apr 30 Aug 3 Nov 30 Dec 31 31 2015 Feb 28 Apr 30 Purchased equipment for $26,000, signing a six-month, 5% note payable.

Recorded the week’s sales of $87,000, one-third for cash, and two-thirds on account. All sales amounts are subject to a 7% sales tax. Ignore cost of goods sold.

Sent last week’s sales tax to the state.

Borrowed $225,000 on a four-year, 8% note payable that calls for annual payment of interest each April 30.

Paid the six-month, 5% note at maturity.

Purchased inventory at a cost of $7,200, signing a three-month, 6% note payable for that amount.

Accrued warranty expense, which is estimated at 1.5% of total sales of $812,000.

Accrued interest on all outstanding notes payable. Accrued interest for each note separately.

Paid off the 6% inventory note, plus interest, at maturity.

Paid the interest for one year on the long-term note payable.

Requirement 1. Record the transactions in the company’s journal. Explanations are not required.

AppendixLO1