Liability transactions The following items were selected from among the transactions completed by O’Donnel Co. during the current year: Jan. 10. Purchased merchandise on account from Laine Co., $240,000, terms n/30. Feb. 9. Issued a 30-day, 4% note for $240,000 to Laine Co., on account. Mar. 11. Paid Laine Co. the amount owed on the note of February 9. May 1. Borrowed $160,000 from Tabata Bank, issuing a 45-day, 5% note. June 1. Purchased tools by issuing a $180,000, 60-day note to Gibala Co., which discounted the note at the rate of 5%. 15. Paid Tabata Bank the interest due on the note of May 1 and renewed the loan by issuing a new 45-day, 7% note for $160,000. (Journalize both the debit and credit to the notes payable account.) July 30. Paid Tabata Bank the amount due on the note of June 15. 30. Paid Gibala Co. the amount due on the note of June 1. Dec. 1. Purchased office equipment from Warick Co. for $400,000, paying $100,000 and Issuing a series of ten 5% notes for $30,000 each, coming due at 30-day intervals. 15. Settled a product liability lawsuit with a customer for $260,000, payable in January. O’Donnel accrued the loss in a litigation claims payable account. 31. Paid the amount due Warick Co. on the first note in the series issued on December 1. Instructions 1. Journalize the transactions. 2. Journalize the adjusting entry for each of the following accrued expenses at the end of the current year: a. Product warranty cost, $23,000. b. Interest on the nine remaining notes owed to Warick Co.

BuyFind

Financial Accounting

15th Edition
Carl Warren + 2 others
Publisher: Cengage Learning
ISBN: 9781337272124
BuyFind

Financial Accounting

15th Edition
Carl Warren + 2 others
Publisher: Cengage Learning
ISBN: 9781337272124

Solutions

Chapter 11, Problem 1PA
Textbook Problem

Liability transactions

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

Jan. 10. Purchased merchandise on account from Laine Co., $240,000, terms n/30.

Feb. 9. Issued a 30-day, 4% note for $240,000 to Laine Co., on account.

Mar. 11. Paid Laine Co. the amount owed on the note of February 9.

May 1. Borrowed $160,000 from Tabata Bank, issuing a 45-day, 5% note.

June 1. Purchased tools by issuing a $180,000, 60-day note to Gibala Co., which discounted the note at the rate of 5%.

15. Paid Tabata Bank the interest due on the note of May 1 and renewed the loan by issuing a new 45-day, 7% note for $160,000. (Journalize both the debit and credit to the notes payable account.)

July 30. Paid Tabata Bank the amount due on the note of June 15.

30. Paid Gibala Co. the amount due on the note of June 1.

Dec. 1. Purchased office equipment from Warick Co. for $400,000, paying $100,000 and Issuing a series of ten 5% notes for $30,000 each, coming due at 30-day intervals.

15. Settled a product liability lawsuit with a customer for $260,000, payable in January.

O’Donnel accrued the loss in a litigation claims payable account.

31. Paid the amount due Warick Co. on the first note in the series issued on December 1.

Instructions

  1. 1. Journalize the transactions.
  2. 2. Journalize the adjusting entry for each of the following accrued expenses at the end of the current year:
    1. a. Product warranty cost, $23,000.
    2. b. Interest on the nine remaining notes owed to Warick Co.

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Chapter 11 Solutions

Financial Accounting
Ch. 11 - Proceeds from notes payable On May 15, Maynard Co....Ch. 11 - Proceeds from notes payable On January 26, Nyree...Ch. 11 - Federal income tax withholding Tam Worldlys weekly...Ch. 11 - Federal income tax withholding Marsha Mellows...Ch. 11 - Employee net pay Tam Worldlys weekly gross...Ch. 11 - Employee net pay Marsha Mellows weekly gross...Ch. 11 - Journalize period payroll The payroll register of...Ch. 11 - Journalize period payroll The payroll register of...Ch. 11 - Journalize payroll tax The payroll register of...Ch. 11 - Journalize payroll tax The payroll register of...Ch. 11 - Vacation pay and pension benefits Fukushima...Ch. 11 - Vacation pay and pension benefits Regling Company...Ch. 11 - Estimated warranty liability EarlKeen Co. sold...Ch. 11 - Estimated warranty liability Quantas Industries...Ch. 11 - Quick ratio Nabors Company reported the following...Ch. 11 - Quick ratio Adieu Company reported the following...Ch. 11 - Current liabilities Bon Nebo Co. sold 25,000...Ch. 11 - Entries for notes payable Cosimo Enterprises...Ch. 11 - Entries for discounting notes payable Ramsey...Ch. 11 - Evaluating alternative notes A borrower has two...Ch. 11 - Entries for notes payable A business issued a...Ch. 11 - Entries for discounted note payable A business...Ch. 11 - Entries for notes payable Bull City Industries is...Ch. 11 - Current portion of long-term debt PepsiCo, Inc.,...Ch. 11 - Calculate payroll An employee earns 25 per hour...Ch. 11 - Calculate payroll Breakin Away Company has three...Ch. 11 - Summary payroll data In the following summary of...Ch. 11 - Payroll tax entries According to a summary of the...Ch. 11 - Payroll entries The payroll register for Gamble...Ch. 11 - Payroll entries Urban Window Company had gross...Ch. 11 - Payroll internal control procedures Big Howies Hot...Ch. 11 - Internal control procedures Daves Scooters is a...Ch. 11 - Accrued vacation pay A business provides its...Ch. 11 - Pension plan entries Yuri Co. operates a chain of...Ch. 11 - Defined benefit pension plan terms In a recent...Ch. 11 - Accrued product warranty Parker Manufacturing Co....Ch. 11 - Accrued product warranty General Motors...Ch. 11 - Contingent liabilities Several months ago, Ayers...Ch. 11 - Quick ratio Gmeiner Co. had the following current...Ch. 11 - Quick ratio The current assets and current...Ch. 11 - Liability transactions The following items were...Ch. 11 - Entries for payroll and payroll taxes The...Ch. 11 - Wage and tax statement data on employer FICA tax...Ch. 11 - Payroll register The following data for Throwback...Ch. 11 - Payroll accounts and year-end entries The...Ch. 11 - Liability transactions The following items were...Ch. 11 - Entries for payroll and payroll taxes The...Ch. 11 - Wage and tax statement data and employer FICA tax...Ch. 11 - Payroll register The following data for Flexco...Ch. 11 - Payroll accounts and year-end entries The...Ch. 11 - Selected transactions completed by Kornett Company...Ch. 11 - Ethics in Action Tonya Latirno is a staff...Ch. 11 - Ethics in Action Marvin Turner was discussing...Ch. 11 - Communication WBM Motorworks is a manufacturer of...Ch. 11 - Recognizing pension expense The annual examination...Ch. 11 - Contingent liabilities Reynolds American, Inc.,...

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