The following transactions of Plymouth Pharmacies occurred during 2017 and 2018: Jan 9 Purchased computer equipment at a cost of $12,000, signing a six-month, 9% note payable for that amount.
Jan. 29 Recorded the week's sales of $63,000, three-fourths on credit and one fourth for cash. Sales amounts are subject to a 6% state sales tax. Ignore cost of goods sold.
Feb 5 Sent the last week's sales tax to the state.
Jul 7 Paid the six-month, 9% note, plus interest, at maturity.
Aug 31 Purchased merchandise inventory for $9,000, signing a six-month, 10% note payable. The company uses the perpetual inventory system.
Dec 31 Accrued warranty expense, which is estimated at 4% of sales of $609,000.
31 Accrued interest on all outstanding notes payable.

2018
Feb 28 Paid the six-month 10% note, plus interest, at maturity.

Required:
Journalize the transactions in Plymouth's general journal. Round to the nearest dollar

Answer and Explanation:

The journal entries are shown below:

On Jan. 9

Computer Equipment $12,000  

         To Short-term Notes Payable $12,000

(Being computer equipment is purchased)

On Jan. 29

Cash ($63,000 × 1 ÷ 4 × 1.06) $16,695  

Accounts Receivable ($63,000 × 3 ÷ 4 × 1.06) $50,085  

        To Sales Revenue $63,000

(Being sales revenue is recorded)

On Feb. 5

Sales Tax Payable $3,780  

         To Cash $3,780

(Being cash paid is recorded)

On Jul. 9

Short-term Notes Payable $12,000  

Interest Expense ($12,000 × 9% × 6 ÷ 12) $540  

          To Cash ($12,000+$540) $12,540

(Being cash is paid)

On Aug. 31

Inventory $9,000  

         To Short-term Notes Payable $9,000

(Being inventory is recorded)

On Dec. 31

Warranty Expense ($609,000 × 4%) $24,360  

          To Estimated Warranty Payable $24,360

(Being warranty expense is recorded)

On Dec. 31

Interest Expense ($9,000 × 10% × 4 ÷ 12) $300  

              To Interest Payable $300

(Being interest expense is recorded)

On Feb. 28

Short-term Notes Payable $9,000  

Interest Expense ($9,000 × 10% × 2 ÷ 12) $150  

Interest Payable ($9,000 × 10% × 4 ÷ 12) $300  

           To Cash ($9,000+$300+$150)  $9,450

(Being cash is recorded)

answer; ///(c) i believe its it ignores cash flows following the payback period;

explanation:

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