Date

Transaction

Year $1$

$5-$Jan

Purchased equipment for $$120,000,$ signing a $9$ month, $8\%$ note payable.

$26-$Jan

Recorded the week$$s sales of $$85,000,75\%$ on account and $25\%$ cash. All sales are

subject to a $7\mathrm{.}25\%$ sales tax.

$7-$Feb

Remitted last week$$s sales tax to the appropriate government agency.

$1-$May

Borrowed $$175,000$ on a $7$ year, $9\%$ note payable calling for annual interest beginning next May $1.$

$1-$Oct

Issued $$100,0005$ year, $12\%,$ semiannual bonds payable. The bonds were issued at $104.$

$5-$Oct

Paid off the January $5$ note payable.

$30-$Nov

Purchased inventory at a cost of $$9,500,$ signing a $3$ month, $8\%$ note payable for that amount.

$31-$Dec

Accrued warranty expense is estimated at $3\%$ of total sales of $$1,200,000($assume the

sales were already recorded$).$

$31-$Dec

Record accrued interest on all outstanding notes and bonds payable $($make a separate journal

entry for each. HINT: there are two notes and one bond for a total of $3$ entries$).$

Year $2$

$28-$Feb

Paid off the November $8\%$ inventory note plus interest at maturity. $4$ journal entries notes payable, interest expense, interest payable, and cash. Interst expense should debit to $2,800$

$1-$Apr

Paid the interest due on the semi$-$annual bonds. $4$ journal entries interest expense, interest payable, premium on bonds, and cash

$1-$May

Paid the interest for one year on the long term note payable. $3$ journal entries interest expense, interest payable, cash