The following are selected transactions of Blue Spruce Company. Blue Spruce prepares financial statements quarterly.

Question

The following are selected transactions of Blue Spruce Company. Blue Spruce prepares financial statements quarterly. Jan. 2 Feb. Mar. 1 31 1 Apr. July Purchased merchandise on account from Nunez Company, $24.000, terms 3/10, n/30. (Blue Spruce uses the perpetual inventory system.) Issued a 9%, 2-month, $24,000 note to Nunez in payment of account. Accrued interest for 2 months on Nunez note. Paid face value and interest on Nunez note. Purchased equipment from Marson Equipment, paying $13,000 in cash and signing a 10%, 3-month, $48,000 note. Accrued interest for 3 months on Marson note. Paid face value and interest on Marson note. Borrowed $24,000 from the Paola Bank by issuing a 3-month, 8% note with a face value of $24,000. Recognized interest expense for 1 month on Paola Bank note. 1 30 Sept. Oct. 1 Dec. 1 Dec. 31 (b) Post to the accounts Notes Payable, Interest Payable, and Interest Expense. (Post entries in the order of journal entries presented in the previous part.) Notes Payable

Help In Homework · Accepted Answer

A) Journal Entries Date Account titles & Explanations Debit Credit 2-Jan Merchandise inventory 24,000 Accounts payable -Nunez 24,000 1-Feb Accounts payable-Nunez 24,000 Notes payable 24,000 31-Mar interest expense 360 interest payable 360 (24000*9%*2/12) 1-Apr notes payable 24,000 interest payable 360 cash 24,360 1-Jul Equipment 61,000 notes payable 48,000 Cash 13,000 30-Sep interest expense 1200 interest payable 1,200 (48,000*10%*3/12) 1-Oct notes payable 48,000 interest payable 1,200 cash 49,200 1-Dec cash 24,000 notes payable 24,000 31-Dec interest expense 160 interest payable 160 (24000*8%*1/12) B) T- Accounts Notes payable 1-Apr 24,000 1-Feb 24,000 1-Oct 48,000 1-Jul 48,000 1-Dec 24,000 end bal 24,000 interest payable 1-Apr 360 31-Mar 360 1-Oct 1,200 30-Sep 1,200 31-Dec 160 End bal 160 interest expense 31-Mar 360 30-Sep 1,200 31-Dec 160 End bal 1720 c) Balance Sheet presentation current liabilities interest payable 160 short term notes payable 24,000 total current liabilities 24,160 d) total interest expense for the year 1,720

Why Choose Us?

0% AI Guarantee

24/7 Support

Plagiarism Free

Expert Tutors

100% Confidential

On-Time Delivery

The following are selected transactions of Blue Spruce Company

Expert Solution

Archived Solution

A)	Journal Entries
	Date	Account titles & Explanations				Debit	Credit

	2-Jan	Merchandise inventory				24,000
		Accounts payable -Nunez					24,000

	1-Feb	Accounts payable-Nunez				24,000
		Notes payable					24,000

	31-Mar	interest expense				360
		interest payable					360
		(240009%2/12)

	1-Apr	notes payable				24,000
		interest payable				360
		cash					24,360

	1-Jul	Equipment				61,000
		notes payable					48,000
		Cash					13,000

	30-Sep	interest expense				1200
		interest payable					1,200
		(48,00010%3/12)

	1-Oct	notes payable				48,000
		interest payable				1,200
		cash					49,200

	1-Dec	cash				24,000
		notes payable					24,000

	31-Dec	interest expense				160
		interest payable					160
		(240008%1/12)


	B)	T- Accounts
		Notes payable
		1-Apr	24,000	1-Feb	24,000
		1-Oct	48,000	1-Jul	48,000
				1-Dec	24,000

				end bal	24,000


		interest payable
		1-Apr	360	31-Mar	360
		1-Oct	1,200	30-Sep	1,200
				31-Dec	160

				End bal	160


		interest expense
		31-Mar	360
		30-Sep	1,200
		31-Dec	160
		End bal	1720


	c)	Balance Sheet presentation
		current liabilities
		interest payable			160
		short term notes payable			24,000
		total current liabilities				24,160


	d)	total interest expense for the year				1,720