AC 111

Example #9

Liabilities

Intex Co. had the following transactions related to various liabilities in the month of October.

Oct. 1

Sold merchandise to a customer for $1,200 in a state with a 5% sales tax.

Oct. 3

Borrowed $10,000 by signing a 30-day note bearing 7% interest.

Oct. 5

Sold merchandise to a customer for $320 in a state with a 5% sales tax.

Oct. 7

Paid the balance due on a $20,000 60-day note bearing 8% interest.

Oct. 15

Remitted the sales taxes collected to the state for the first half of the month.

Oct. 25

Sold merchandise to a customer for $750 in state with a 5% sales tax.

Oct. 31

Recognized the warranty cost for the month. Warranty costs for all products sold is estimated to be 2% of sales.

Required:

1. Prepare the necessary journal entries for these transactions.