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The following items were selected from among the transactions completed by ODonnel Co. during the current year: Jan. 10. Purchased merchandise on account from Laine
The following items were selected from among the transactions completed by O’Donnel Co. during the current year:
Jan. | 10. | Purchased merchandise on account from Laine Co., $240,000, terms n/30. |
Feb. | 9. | Issued a 30-day, 4% note for $240,000 to Laine Co., on account. |
Mar. | 11. | Paid Laine Co. the amount owed on the note of February 9. |
May | 1. | Borrowed $160,000 from Tabata Bank, issuing a 45-day, 5% note. |
June | 1. | Purchased tools by issuing a $180,000, 60-day note to Gibala Co., which discounted the note at the rate of 5%. |
15. | Paid Tabata Bank the interest due on the note of May 1 and renewed the loan by issuing a new 45-day, 7% note for $160,000. (Journalize both the debit and credit to the notes payable account.) | |
July | 30. | Paid Tabata Bank the amount due on the note of June 15. |
30. | Paid Gibala Co. the amount due on the note of June 1. | |
Dec. | 1. | Purchased office equipment from Warick Co. for $400,000, paying $100,000 and issuing a series of ten 5% notes for $30,000 each, coming due at 30-day intervals. |
15. | Settled a product liability lawsuit with a customer for $260,000, payable in January. O’Donnel accrued the loss in a litigation claims payable account. | |
31. | Paid the amount due Warick Co. on the first note in the series issued on December 1. |
Required: | |||||
1. | Journalize the transactions. Refer to the Chart of Accounts for exact wording of account titles. Assume a 360-day year. | ||||
2. | Journalize the adjusting entry for each of the following accrued expenses at the end of the current year (refer to the Chart of Accounts for exact wording of account titles):
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A Date Accounts title and Explanations Debit Credit Jan10 Inventory 240000 Accounts PayableLa...Get Instant Access to Expert-Tailored Solutions
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