Problem 7-7

On October 1, 2017, Pearl Equipment Company sold a pecan-harvesting machine to Valco Brothers Farm, Inc. In lieu of a cash payment Valco Brothers Farm gave Arden a 2-year, $138,800, 8% note (a realistic rate of interest for a note of this type). The note required interest to be paid annually on October 1. Pearl’s financial statements are prepared on a calendar-year basis.

Assuming Valco Brothers Farm fulfills all the terms of the note, prepare the necessary journal entries for Pearl Equipment Company for the entire term of the note. Assume that reversing entries are not made on January 1, 2018 and January 1, 2019. (Record journal entries in the order presented in the problem. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually.)

Date

Account Titles and Explanation

Debit

Credit

10/1/1712/31/1710/1/1812/31/1810/1/ 19

10/1/1712/31/1710/1/1812/31/1810/1/ 19

10/1/1712/31/1710/1/1812/31/1810/1/ 19

10/1/1712/31/1710/1/1812/31/1810/1/ 19

10/1/1712/31/1710/1/1812/31/1810/1/ 19

(To record the collection of interest)

(To record the collection of the note)

Your aunt is thinking about opening a hardware store. she estimates that it would cost $300,000 per year to rent the location and buy the stock. in addition, she would have to quit her $45,000 per year job as an accountant. a. define opportunity cost. b. what is your aunt's opportunity cost of running a hardware store for a year? if your aunt thought she could sell $350,000 worth of merchandise in a year, should she open the store? explain.

Assume that all of thurmond company’s sales are credit sales. it has been the practice of thurmond company to provide for uncollectible accounts expense at the rate of one-half of one percent of net credit sales. for the year 20x1 the company had net credit sales of $2,021,000 and the allowance for doubtful accounts account had a credit balance, before adjustments, of $630 as of december 31, 20x1. during 20x2, the following selected transactions occurred: jan. 20 the account of h. scott, a deceased customer who owed $325, was determined to be uncollectible and was therefore written off. mar. 16 informed that a. nettles, a customer, had been declared bankrupt. his account for $898 was written off. apr. 23 the $906 account of j. kenney & sons was written off as uncollectible. aug. 3 wrote off as uncollectible the $750 account of clarke company. oct. 20 wrote off as uncollectible the $1,130 account of g. michael associates. oct. 27 received a check for $325 from the estate of h. scott. this amount had been written off on january 20 of the current year. dec. 20 cater company paid $7,000 of the $7,500 it owed thurmond company. since cater company was going out of business, the $500 balance it still owed was deemed uncollectible and written off. required: prepare journal entries for the december 31, 20x1, and the seven 20x2 transactions on the work sheets provided at the back of this unit. then answer questions 8 and 9 on the answer sheet. t-accounts are also provided for your use in answering these questions. 8. which one of the following entries should have been made on december 31, 20x1?

Suppose jamal purchases a pair of running shoes online for $60. if his state has a sales tax on clothing of 6 percent, how much is he required to pay in state sales tax?