Part I:

Example1

Saldana Sales Company has the following selected accounts after posting adjusting entries:

Accounts Payable$62,000

Notes Payable, 3-month50,000

Accumulated DepreciationEquipment14,000

Notes Payable, 5-year, 6%80,000

Payroll Tax Expense4,000

Interest Payable3,000

Mortgage Payable120,000

Sales Tax Payable38,000

Instructions: Prepare the current liability section of Saldana Sales Company's balance sheet, assuming $20,000 of the mortgage is payable next year.

Solution Example 1:

Example 2:

On December 1, Destin Corporation borrowed $5,000 on a 90-day, 6% note.Instructions: Prepare the entries to record the issuance of the note, the accrual of interest at year end, and the payment of the note.

Solution Exemple 2:

Example 3: On March 1, Gorman Company borrows $60,000 from Ottawa State Bank by signing a 6-month, 8%, interest-bearing note.

Instructions: Prepare the necessary entries below associated with the note payable on the books of Gorman Company.

(a)Prepare the entry on March 1 when the note was issued.

(b)Prepare adjusting entries necessary on June 30 in order to prepare the semi-annual financial statements. Assume no other interest accrual entries have been made.

(c)Prepare the adjusting entry at August 31 to accrue interest.

(d)Prepare the entry to record payment of the note at maturity.

Solution example 3:

Example 4

During December 2008, Fashion Vixen Publishing sold 2,500 12-month annual magazine subscriptions at a rate of $30 each. The first issues were mailed in February 2009. Prepare the entries on Fashion Vixen's books to record the sale of the subscriptions and the mailing of the first issues.

Solution Example 4:

Example 5:

Landen Company had cash sales of $54,250(including taxes) for the month of June. Sales are subject to 8.5%sales tax.Prepare the entry to record the sale.

Solution Example 5:

Example 6:

Stevens Company does not segregate sales and sales taxes on its cash register. Its register total for the month is $185,500, which includes a 6% sales tax.

Instructions

Compute sales taxes payable, and make the entry to record sales and sales taxes payable.

Solution Example6:

Example 7

On December 1, Wynn Company introduces a new product that includes a one-year warranty on parts. In December, 500 units are sold. Management believes that 5% of the units will be defective and that the average warranty costs will be $60 per unit. Prepare the adjusting entry at December 31 to accrue the estimated warranty cost.

Solution Example 7: