Problem #1 - Journal Entries
Arnold Corporation had the following transactions during 2014.
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.