Richmond Company engaged in the following transactions during 2011:
a. Purchased $16,000 of supplies from ABC Supplies on February 16. Amount due in full on March 31.
b. Paid for 25 percent of the purchased merchandise (transaction a) on February 26.
c. On March 31 negotiated a payment extension with ABC for the remainder of the balance from the February 16 purchase by signing a one-year, 10 percent note.
d. Borrowed $300,000 on a 10-month, 8 percent interest-bearing note on April 30.
e. Purchased $78,000 of merchandise on June 4. Amount due in full on June 30.
f. Paid for the purchased merchandise (transaction e) on June 24.
g. Received from Haywood, Inc., on August 19, a $22,000 deposit against a total selling price of $220,000 for services to be performed for Haywood.
h. Paid quarterly installments of Social Security and Medicare and individual income tax withholdings, as shown below, on October 15. The Social Security was recorded as an expense during the quarter and the amount paid represents both the employee and employer share:
Social Security taxes ............ $185,000
Medicare taxes .............. 43,266
Income taxes withheld ........... 319,000
i. On December 15 Richmond completed the services ordered by Haywood on August 19.
Haywood’s remaining balance of $198,000 is due on January 31.
1. Prepare journal entries for these transactions.
2. Prepare any adjusting entries necessary at December 31, 2011.