Pr. 13-153—Accounts and
Notes Payable.
Described below are certain
transactions of Lamar Company for 2018:
1 .On May 10, the company purchased goods from Fox Company for $75,000,
terms 2/10,n/30. Purchases and
accounts payable are recorded at net amounts. The invoice was paid on
May 18.
2.
On June 1, the company purchased equipment for $150,000 from Rao Company,
paying$50,000 in cash and giving a one-year, 9% note for the balance.
3.
On September 30, the company discounted at 10% its $300,000, one-year
zero-interest-bearing note at Virginia State Bank.
Instructions
(a) Prepare
the journal entries necessary to record the transactions above using appropriate dates.
(b) Prepare
the adjusting entries necessary at December 31, 2018 in order to properly report interest expense related to the above transactions. Assume straight-line
amortization of discounts.
(c) Indicate
the manner in which the above transactions should be reflected in the Current Liabilities section of Lamar
Company's December 31, 2018 balance sheet
