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28 Sep 2019
2. Current liabilities: entries anddisclosure. A review of selected financial activities ofVisconti%u2019s during 2000 disclosed the following:<?xml:namespace prefix = o ns ="urn:schemas-microsoft-com:office:office" />
12/1 Borrowed $20,000 from the First City Bank by signing a 3-month, 15% note payable. Interest and principal are due atmaturity. 12/10 Established a warranty liability for the XY-80, anew product. Sales are expected to total 1,000 units during themonth. Past experience with similar products indicates that 2% ofthe units will require repair, with warranty costs averaging $27per unit (parts only). 12/22 Purchased $16,000 of merchandise onaccount from Oregon Company, terms 2/10, n/30. 12/26 Borrowed$5,000 from First City Bank; signed a 15% note payable due in 60days. (Assume 360 days for daily interest calculation) 12/31Repaired six XY-80s during the month at a total cost of $162. 12/31Accrued 3 days of salaries at a total cost of $1,400. Instructions
a. Prepare journal entries to record thetransactions.
b. Prepare adjusting entries on December 31to record accrued interest for each of the notes payable.
2. Current liabilities: entries anddisclosure. A review of selected financial activities ofVisconti%u2019s during 2000 disclosed the following:<?xml:namespace prefix = o ns ="urn:schemas-microsoft-com:office:office" />
12/1 Borrowed $20,000 from the First City Bank by signing a 3-month, 15% note payable. Interest and principal are due atmaturity. 12/10 Established a warranty liability for the XY-80, anew product. Sales are expected to total 1,000 units during themonth. Past experience with similar products indicates that 2% ofthe units will require repair, with warranty costs averaging $27per unit (parts only). 12/22 Purchased $16,000 of merchandise onaccount from Oregon Company, terms 2/10, n/30. 12/26 Borrowed$5,000 from First City Bank; signed a 15% note payable due in 60days. (Assume 360 days for daily interest calculation) 12/31Repaired six XY-80s during the month at a total cost of $162. 12/31Accrued 3 days of salaries at a total cost of $1,400.Instructions
a. Prepare journal entries to record thetransactions.
b. Prepare adjusting entries on December 31to record accrued interest for each of the notes payable.
Jarrod RobelLv2
28 Sep 2019
