Question

Jack Hammer Company completed the following transactions. The annual accounting period ends December 31. Apr. 30...

Jack Hammer Company completed the following transactions. The annual accounting period ends December 31.

Apr. 30 Received $735,000 from Commerce Bank after signing a 12-month, 6 percent, promissory note.
June 6 Purchased merchandise on account at a cost of $84,000. (Assume a perpetual inventory system.)
July 15 Paid for the June 6 purchase.
Aug. 31 Signed a contract to provide security service to a small apartment complex starting in September, and collected six months’ fees in advance amounting to $29,400.
Dec. 31 Determined salary and wages of $49,000 were earned but not yet paid as of December 31 (ignore payroll taxes).
Dec. 31 Adjusted the accounts at year-end, relating to interest.
Dec. 31 Adjusted the accounts at year-end, relating to security service.

Required:

1. & 2. Prepare journal entries for each of the transactions through August 31 and adjusting entries required on December 31.

3. Show how all of the liabilities arising from these items are reported on the balance sheet at December 31.

Business   Accounting   
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Answer #1
Journal entries
particulars Debit credit
cash 735000
notes payable 735000
inventory 84000
accounts payable 84000
accounts payable 84000
cash 84000
cash 29400
unearned revenue 29400
salary & wages 49000
salary wages payable 49000
interest exp (735000*6%*8/12 29400
interest payable 29400
unearned revenue 29400*4/6 19600
revenue earned 19600
Balance sheet
non current laibilities amount
notes payable 735000
current laibilities
unearned revenue(29400-19600) 9800
salary & wages payable 49000
interest payable 29400
total laibilities 823200
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