PA10-2 Recording and Reporting Current Liabilities with Evaluation of Effects on the Debt-to-Assets Ratio [LO 10-2, LO 10-5]

Jack Hammer Company completed the following transactions. The annual accounting period ends December 31.

Apr.		30		Received $705,000 from Commerce Bank after signing a 12-month, 7 percent, promissory note.
June		6		Purchased merchandise on account at a cost of $82,000. (Assume a perpetual inventory system.)
July		15		Paid for the June 6 purchase.
Aug.		31		Signed a contract to provide security service to a small apartment complex starting in September, and collected six months fees in advance amounting to $28,200.
Dec.		31		Determined salary and wages of $47,000 were earned but not yet paid as of December 31 (ignore payroll taxes).
Dec.		31		Adjusted the accounts at year-end, relating to interest.
Dec.		31		Adjusted the accounts at year-end, relating to security service.

Required:

1. 1. & 2. Prepare journal entries for each of the transactions through August 31 and adjusting entries required on December 31.

2. 3. Show how all of the liabilities arising from these items are reported on the balance sheet at December 31.

Req 1 and 2 Reg 3 Prepare journal entries for each of the transactions through August 31 and adjusting entries required on December 31. (Do not round intermediate calculations. If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.) View transaction list Journal entry worksheet 2 3 4 5 6 7 Record the borrowing of $705,000. Note: Enter debits before credits. Date General Journal Debit Credit Apr 30 Record entry Clear entry View general journal Req 1 and 2 Req3 > 2 Record the purchase of inventory worth $82,000 on account. 3 Record the payment for inventory in full. 4 Record the collection of six month's security service fees in advance amounting to $28,200. 5 Record the wages earned, but not yet paid as of December 31. 1 6 Record the adjusting entry relating to interest. 7 Record the adjusting entry relating to security service fees. Note : = journal entry has been entered Complete this question by entering your answers in the tabs below. Req 1 and 2 Reg 3 Show how all of the liabilities arising from these items are reported on the balance sheet at December 31. (Do not round intermediate calculations.) JACK HAMMER COMPANY Balance Sheet (partial) At December 31