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Year 1 5 - Jan Purchased equipment for $ 1 2 0 , 0 0 0 , signing a 9 month, 8 % note payable.

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Year 1
5-Jan Purchased equipment for $120,000, signing a 9 month, 8% note payable.
26-Jan Recorded the week's sales of $85,000,75% on account and 25% cash. All sales are
subject to a 7.25% sales tax.
7-Feb Remitted last week's sales tax to the appropriate government agency.
1-May Borrowed $175,000 on a 7 year, 9% note payable calling for annual interest beginning next May 1.
1-Oct Issued $100,0005 year, 12%, semiannual bonds payable. The bonds were issued at 104.
5-Oct Paid off the January 5 note payable.
30-Nov Purchased inventory at a cost of $9,500, signing a 3 month, 8% note payable for that amount.
31-Dec Accrued warranty expense is estimated at 3% of total sales of $1,200,000(assume the
sales were already recorded).
31-Dec Record accrued interest on all outstanding notes and bonds payable (make a separate journal
entry for each. HINT: there are two notes and one bond for a total of 3 entries).
Year 2
28-Feb Paid off the November 8% inventory note plus interest at maturity.
1-Apr Paid the interest due on the semi-annual bonds.
1-May Paid the interest for one year on the long term note payable. April 1 interest expense debit should equal 2,800
Total debits and credits in journal should equal 714,028
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