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Inventory, notes, journal entries

1. Candlestick Corporation purchased raw material used for manufacturing candles from a supplier on June 1. The total amount of the purchase was $10,500 of which $3,000 was paid on the day of purchase. The remaining amount owed is due to the suppler within 15 days.
Prepare the journal entry for Candlestick Corporation to record the purchase if the material from the supplier on June 1.

2. Calendar, Inc. purchased a new binding machine on May 10 for $16,000. At the time of purchase they paid the seller $1,000 and signed a 60 days note for the remaining balance. All principal and interest on the note will be paid when it is due. The note bears interest at a 10% annual rate.
Prepare the May 10 journal entry to record the purchase of the binding machine.

3. Mercury, Inc. purchased a conference table for their board room on March 1, 2008. The table cost $8,000 and the seller accepted a four month note as payment. The note bears interest at annual rate of 12%. Interest accrues monthly, but all principal and interest will be paid when the note matures.
Prepare the March 31, 2008 journal entry for Mercury, Inc. to record the accrual of interest on the note.

4. On February 1, Dr. Joseph D.D.S purchased an examination chair from uncomfortable Enterprises. The $18,000 chair was purchase by signing a five month (10% annual rate) note. Interest accrues monthly, but all interest and principal will be paid upon maturity of the note.
Prepare the June 30 journal entry Dr. Joseph D.D.S recording the repayment of the entire note and interest.

Solution Preview

1. Candlestick Corporation purchased raw material used for manufacturing candles from a supplier on June 1. The total amount of the purchase was $10,500 of which $3,000 was paid on the day of purchase. The remaining amount owed is due to the suppler within 15 days.

Prepare the journal entry for Candlestick Corporation to record the purchase if the material from the supplier on June 1.

Debit
Inventory (raw material) 10,500

Credit
Cash 3,000
Accounts Payable 7,500

2. Calendar, Inc. purchased a ...

Solution Summary

Your guide is simple and direct -- indicating the accounts involved and the debit/credit amounts.

$2.19