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Liability Transactions The following items were selected from among the transactions completed by Emerald Bay Stores Co. during the current year: Feb. 15. Purchased merchandise
Liability Transactions
The following items were selected from among the transactions completed by Emerald Bay Stores Co. during the current year:
Feb. 15. | Purchased merchandise on account from Hood Co., $216,000, terms n/30. | |
Mar. 17. | Issued a 60-day, 7% note for $216,000 to Hood Co., on account. | |
May 16 | Paid Hood Co. the amount owed on the note of March 17. | |
June 15. | Borrowed $170,400 from Acme Bank, issuing a 60-day, 8% note. | |
July 21. | Purchased tools by issuing a $105,000, 90-day note to Columbia Supply Co., which discounted the note at the rate of 8%. | |
Aug. 14. | Paid Acme Bank the interest due on the note of June 15 and renewed the loan by issuing a new 60-day, 10% note for $170,400. (Journalize both the debit and credit to the notes payable account.) | |
Oct. 15. | Paid Acme Bank the amount due on the note of August 14. | |
Oct. 19. | Paid Columbia Supply Co. the amount due on the note of July 21. | |
Dec. 1. | Purchased office equipment from Mountain Equipment Co. for $96,000, paying $16,000 and issuing a series of ten 6% notes for $8,000 each, coming due at 30-day intervals. | |
Dec. 12. | Settled a product liability lawsuit with a customer for $55,000, payable in January. Emerald Bay accrued the loss in a litigation claims payable account. | |
Dec. 31.
Required: 1. Journalize the transactions. If an amount box does not require an entry, leave it blank. Assume a 360-day year. If required, round to one decimal place.
| Paid the amount due Mountain Equipment Co. on the first note in the series issued on December 1. |
2. Journalize the adjusting entry for each of the following accrued expenses at the end of the current year: (a) product warranty cost, $14,000; (b) interest on the nine remaining notes owed to Mountain Equipment Co.
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