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ACC 205 Week 5 P10-15A The following transactions of Denver Pharmacies occurred during 2011 and 2012

ACC 205 Week 5 P10-15A The following transactions of Denver Pharmacies occurred during 2011 and 2012

ACC 205 Week 5Accounting, 9e

P10-15A Journalizing liability transactions LO 1, 2 [30-40 minutes]

P10-15A The following transactions of Denver Pharmacies occurred during 2011 and 2012

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P10-15A The following transactions of Denver Pharmacies occurred during 2011 and 2012:

2011
Jan 9 Purchased computer equipment at a cost of $9,000, signing a six-month, 6% note payable for that amount.
29 Recorded the week’s sales of $64,000, three-fourths on credit, and one-fourth for cash. Sales amounts are subject to a 6% state sales tax.
Feb 5 Sent the last week’s sales tax to the state.
28 Borrowed $204,000 on a four-year, 10% note payable that calls for $51,000 annual installment payments plus interest.

Record the current and long-term portions of the note payable in two separate accounts.
Jul 9 Paid the six-month, 6% note, plus interest, at maturity.
Aug 31 Purchased inventory for $12,000, signing a six-month, 9% note payable.
Dec 31 Accrued warranty expense, which is estimated at 2% of sales of $603,000.

Accrued interest on all outstanding notes payable. Make a separate interest accrual for each note payable.

2012
Feb 28 Paid the first installment and interest for one year on the four-year note payable.
29 Paid off the 9% note plus interest at maturity.

Requirements 1. Journalize the transactions in Denver’s general journal. Explanations are not required.

SOLUTION PREVIEW
P 10-15A
Req. 1
Journal Entry
DATE
ACCOUNTS AND EXPLANATIONS
POST.
REF.
DEBIT
CREDIT
 
2011
 
 
 
Jan
  9
Computer equipment
 
9,000
 
 
 
            Short-term notes payable
 
 
9,000
 
 
 
 
 
 
Jan
29
Cash ($64,000 × 1/4 × 1.06)   
 
16,960
 

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