Business Finance
Journal Entries

Question Description

Problem #1 - Journal Entries 

Arnold Corporation had the following transactions during 2015. 

Journalize them in the general journal as follows. 

1) Purchased a copper mine for $1,000,000 with an estimated 100,000 tons of copper capacity. 

2) Harvested 91,000 tons of copper. Record the depletion expense using the units-of- production method. 

3) Sold product for $150,000 cash. Record the entry to receive the cash, and record the appropriate amount of Sales Revenue and Sales Tax Payable (assuming a state sales tax rate of 8%). 

4) Received $100,000 cash for the sale of product scheduled to be delivered in 6- months. 

5) Sold product for $25,000 that included a warranty for complete replacement within 2 years. The replacement rate is 5% of the sale price. Record the warranty liability. 

6) Of the $100,000 cash received in transation # 4), 25% of the product has been delivered. 

7) Signed a promissory note for $250,000 at 6% for 6 months, with interest and principal due at maturity. 

8) Sold a $600,000 bond at 9% for 6 years with interest to be paid semi-annually. The sale price of the bonds was $627,500. 

9) Made the first payment of interest on the $600,000 bond. 

10) At maturity, paid the promissory note principal and interest. 

Final Answer

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Purdue University

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