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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.
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 $480,000 from Commerce Bank after signing a 12-month, 6 percent, promissory note. | ||
June | 6 | Purchased merchandise on account at a cost of $67,000. (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 $19,200. | ||
Dec. | 31 | Determined salary and wages of $32,000 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:
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1. & 2. Prepare journal entries for each of the transactions through August 31 and adjusting entries required on December 31.
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3. Show how all of the liabilities arising from these items are reported on the balance sheet at December 31.
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