Selected transactions of the Lizard Lick Corporation during 2013 are as follows: Jan. 5 Purchased merchandise from

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Selected transactions of the Lizard Lick Corporation during 2013 are as follows:

Jan. 5 Purchased merchandise from Boston Company for $30,000; terms, 2/10, n/30. Purchases and accounts payable are recorded by Lizard Lick using the net price method.

26 Paid the January 5 invoice.

Mar. 31 Purchased a van for $19,950 from Hill Sales Company, paying $9,950 in cash and issuing a 12%, 1-year note for the balance of the purchase price.

May 1 Borrowed money from Mebane National Bank by discounting its own 1-year, non-interest-bearing note made out for the maturity value of $50,000 at an interest rate of 12%.

Nov. 2 Received $500 from Carr Mill Playhouse as a deposit to be refunded after certain rental furniture to be used in a play is returned on January 7, 2014.

5 Made sales on credit to Jones Company for $15,000 sales taxes of 6½% were added to the $15,000 price (ignore cost of goods sold).

6 Purchased another van at a cost of $18,000 from a company located in a state that does not levy a sales tax. The entire purchase price was paid in cash. Lizard Lick is located in a state that assesses a use tax of 6½% on non-salable equipment bought outside its sales tax authority. The van and the liability for the use tax are to be recorded.

Dec. 1 Estimated property taxes for the year December 1, 2013, to November 30, 2014, are $36,000 (ignore previous property taxes). The corporation follows the practice of recording its property tax by a monthly accrual starting one month following the lien date. The tax becomes a lien on December 1 and is payable in two installments on May 1 and October 1.

31 Estimated quarterly income taxes for the last quarter of the year are $150,000.

Required:

Prepare journal entries to record the preceding transactions for 2013. Include year-end interest accruals.

Accounts Payable
Accounts payable (AP) are bills to be paid as part of the normal course of business.This is a standard accounting term, one of the most common liabilities, which normally appears in the balance sheet listing of liabilities. Businesses receive...
Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...
Maturity
Maturity is the date on which the life of a transaction or financial instrument ends, after which it must either be renewed, or it will cease to exist. The term is commonly used for deposits, foreign exchange spot, and forward transactions, interest...
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Intermediate Accounting Reporting and Analysis

ISBN: 978-1111822361

1st edition

Authors: James M. Wahlen, Jefferson P. Jones, Donald Pagach

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