Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

The following items were selected from among the transactions completed by Pioneer Co. during the current year: Mar. 1 Purchased merchandise on account from Galston

The following items were selected from among the transactions completed by Pioneer Co. during the current year:

Mar. 1 Purchased merchandise on account from Galston Co., $360,000, terms n/30.
31 Issued a 30-day, 5% note for $360,000 to Galston Co., on account.
Apr. 30 Paid Galston Co. the amount owed on the note of March 31.
Jun. 1 Borrowed $180,000 from Pilati Bank, issuing a 45-day, 4% note.
Jul. 1 Purchased tools by issuing a $210,000, 60-day note to Zegna Co., which discounted the note at the rate of 7%.
16 Paid Pilati Bank the interest due on the note of June 1 and renewed the loan by issuing a new 30-day, 6.5% note for $180,000. (Journalize both the debit and credit to the notes payable account.)
Aug. 15 Paid Pilati Bank the amount due on the note of July 16.
30 Paid Zegna Co. the amount due on the note of July 1.
Dec. 1 Purchased office equipment from Taylor Co. for $500,000, paying $120,000 and issuing a series of ten 6% notes for $38,000 each, coming due at 30-day intervals.
22 Settled a product liability lawsuit with a customer for $310,000, payable in January. Pioneer accrued the loss in a litigation claims payable account.
31 Paid the amount due Taylor 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):
A. Product warranty cost, $27,500.

B. Interest on the nine remaining notes owed to Taylor Co. Assume a 360-day year

CHART OF ACCOUNTS
Pioneer Co.
General Ledger
ASSETS
110 Cash
111 Accounts Receivable
112 Interest Receivable
113 Notes Receivable
115 Merchandise Inventory
116 Supplies
118 Prepaid Insurance
120 Land
123 Building
124 Accumulated Depreciation-Building
125 Office Equipment
126 Accumulated Depreciation-Office Equipment
127 Tools
128 Accumulated Depreciation-Tools
LIABILITIES
210 Accounts Payable-Galston Co.
211 Accounts Payable-Taylor Co.
212 Accounts Payable-Zegna Co.
213 Interest Payable
214 Notes Payable
215 Salaries Payable
216 Social Security Tax Payable
217 Medicare Tax Payable
218 Employees Federal Income Tax Payable
219 Employees State Income Tax Payable
220 Group Insurance Payable
221 Bond Deductions Payable
224 Federal Unemployment Tax Payable
225 State Unemployment Tax Payable
226 Vacation Pay Payable
227 Unfunded Pension Liability
228 Product Warranty Payable
229 Litigation Claims Payable
EQUITY
310 Owner, Capital
311 Owner, Drawing
312 Income Summary

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Principles Of Auditing And Other Assurance Services

Authors: Ray Whittington, Kurt Pany

16th Edition

007352686X, 978-0073526867

More Books

Students also viewed these Accounting questions

Question

For the following exercises, evaluate the expressions. tan 1 (3)

Answered: 1 week ago