Answered

Welcome to Westonci.ca, your one-stop destination for finding answers to all your questions. Join our expert community now! Explore a wealth of knowledge from professionals across different disciplines on our comprehensive platform. Get immediate and reliable solutions to your questions from a community of experienced professionals on our platform.

Grossman Products began operations in 2021. The following selected transactions occurred from September 2021 through March 2022. Grossman's fiscal year ends on December 31. 2021:

a. On September 5, Grossman opened a checking account and negotiated a short-term line of credit of up to $10,100,000 at 10% interest. The company is not required to pay any commitment fees.
b. On October 1, Grossman borrowed $8,100,000 cash and issued a 5-month promissory note with 12% interest payable at maturity.
c. Grossman received $3,100 of refundable deposits in December for reusable containers.
d. For the September through December period, sales on account totaled $5,100,000. The state sales tax rate is 4% and 70% of sales are subject to sales tax.
e. Grossman recorded accrued interest. 2022.
f. Grossman paid the promissory note on the March 1 due date.
g. Half of the storage containers are returned in March, with the other half expected to be returned over the next 6 months.

Required:
1. Prepare the appropriate journal entries for the 2021 transactions.
2. Prepare the liability section of the balance sheet at December 31, 2021, based on the data supplied.
3. Prepare the appropriate journal entries for the events occurring in March of 2022.

Sagot :

abiolataiwo2015

a. The appropriate journal entries for the 2021 transactions are: Debit Cash $8,100,000; Credit Notes payable $8,100,000.

b. The liability section of the balance sheet at December 31, 2021 is $8,488,900.

Journal entries

Grossman Products journal entries

a. No journal entry

b. Debit Cash $8,100,000

Credit Notes payable $8,100,000

c. Debit Cash $3,100

Credit Liability for refundable deposits $3,100

d. Debit Cash/Account receivable $5,242,800

($5,100,000+$142,800)

Credit Sales tax payable $142,800

($5,100,000×4%×70%)

Credit Sales revenue $5,100,000

e. Debit Interest expense $243,000

Credit Interest payable $243,000

($8,100,000×12%×3/12)

2. Balance sheet (partial) at December 31 2021

Current liabilities:

Notes payable $8,100,000

Liability for refundable deposits $3,100

Sales tax payable $142,800

Interest payable $243,000

Total current liabilities $8,488,900

3a. Debit Notes payable $8,100,000

Debit  Interest payable $243,000

Debit  Interest expense $162,000

($8,100,000×12%×2/12)

Credit Cash $8,505,000

($8,100,000+$243,000+$162,000)

b. Debit Liability for refundable deposits $1,550

($3,100×1/2)

Credit Cash $1,550

Inconclusion the appropriate journal entries for the 2021 transactions are: Debit Cash $8,100,000; Credit Notes payable $8,100,000.

Learn more about journal entries here:https://brainly.com/question/14279491

We appreciate your time. Please revisit us for more reliable answers to any questions you may have. Thanks for using our platform. We aim to provide accurate and up-to-date answers to all your queries. Come back soon. We're dedicated to helping you find the answers you need at Westonci.ca. Don't hesitate to return for more.