chapter09probsetc - PROBLEM SET C PROBLEM 9-1C Jessicas...

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PROBLEM SET C PROBLEM 9-1C Jessica’s Fashion Consulting entered into the following transactions involving short-term liabilities in 2004 and 2005. 2004 Apr. 20 Purchased $37,500 of merchandise on credit from MissyT, terms are 1/10, n/30. BEC uses the perpetual inventory system. May 15 Replaced the account payable to MissyT with a 90-day, $30,000 note bearing 12% annual interest along with paying $7,500 in cash. July 3 Borrowed $55,000 cash from U.O. Bank by signing a 60-day interest-bearing note for $55,000.The note’s annual interest rate is 8%. ? Paid the amount due on the note to MissyT at maturity. ? Paid the amount due on the note to U.O. Bank at maturity. Nov. 24 Borrowed $24,000 cash from IMF Bank by signing a 60-day, 9% interest-bearing note with a face value of $24,360. Dec. 31 Recorded an adjusting entry for the accrual of interest on the note to IMF Bank. 2005 ? Paid the amount due on the note to IMF Bank at maturity. Required 1. Determine the maturity dates for each of the three notes described. 2. Determine the interest due at maturity for the three notes. (Assume a 360-day year.) 3. Determine the interest to be recorded in the adjusting entry at the end of 2004. 4. Determine the interest to be recorded in 2005. 5. Prepare journal entries for all the preceding transactions and events for years 2004–2005. PROBLEM 9-2C On June 1, 2004 Florence Fine Fashions began selling tiaras for $40 each. The crown comes with a 30-day warranty against tarnishing. When a customer brings back a tarnished crown Florence Fine Fashios gives the customer a new crown(no questions asked about the events that led to the tarnishing). The company uses the perpetual inventory method and pays $10 for each crown. It is expected that 10% of the crowns sold will be returned for unraveling. The following transactions and events occurred: 2004 Nov. 10 Sold 180 crowns for $7,200 cash. 30 Recognized warranty expense for June with an adjusting entry. Dec. 3 Replaced 15 crowns that were returned under the warranty. 15 Sold 220 crowns for $8,800 cash.
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29 Replaced 20 crowns that were returned under the warranty. 31 Recognized warranty expense for July with an adjusting entry.
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This note was uploaded on 09/23/2010 for the course FIN 310 taught by Professor Smith during the Fall '10 term at Arizona Western College.

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chapter09probsetc - PROBLEM SET C PROBLEM 9-1C Jessicas...

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