The following items were selected from among the transactions completed by Pot of Gold Coffee Ltd., a private coffee importing company with a May 31 year-end.
2015
Jul. 10. Purchased merchandise on account from Hoffer Co., $220,000, terms 2/10, n/30. Pot of Gold Coffee Ltd. uses the perpetual inventory method.
Jul. 11. Borrowed $150,000 from Capital Credit Union, issuing a 180-day, 5% note.
Jul. 15. Paid Hoffer Co. for the amount owed on the July 10 transaction.
2016
Jan. 1. Issued $3,000,000 of 15-year, 6% bonds at an effective interest rate of 5%, receiving cash of $3,313,946. Interest on the bonds is payable semiannually on December 31 and June 30.
Jan. 7 Paid Capital Credit Union the interest due on the note of July 11 and renewed the loan by issuing a new 180-day, 6% note for $150,000.
May. 31. Recorded the year-end adjusting entry for the interest expense on the $3,000,000 bonds and the amortization of the bond premium, using the straight-line method.
Recorded the year-end adjusting entry for the interest expense on the $150,000 note of January 7.
Jun. 30. Recorded the interest payment and the amortization of the premium on the $3,000,000 bonds, using the straight-line method.
Instructions
1. Journalize the transactions.
2. Show the reporting of the liabilities for Pot of Gold Coffee Ltd. on the balance sheet at May 31, 2016, rounding to the nearest whole dollar.