Question Details

Current Liabilities section of Lamar Company's 



1
Described below are certain transactions of Lamar Company for 2014:
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 $90,000 from Rao Company, paying $30,000 in cash and giving a one-year, 9% note for the balance.
3.	On September 30, the company discounted at 10% its $200,000, 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, 2014 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, 2014 balance sheet.


2
At the financial statement date of December 31, 2014, the liabilities outstanding of Pollard Corporation included the following:
1.	Cash dividends on common stock, $40,000, payable on January 15, 2015.
2.	Note payable to Wabaso State Bank, $470,000, due January 20, 2015.
3.	Serial bonds, $1,400,000, of which $350,000 mature during 2015.
4.	Note payable to Orlando National Bank, $300,000, due January 27, 2015.
The following transactions occurred early in 2015:
	January 15:	The cash dividends on common stock were paid.
	January 20:	The note payable to Wabaso State Bank was paid.
	January 25:	The corporation entered into a financing agreement with Wabaso State Bank, enabling it to borrow up to $500,000 at any time through the end of 2017.  Amounts borrowed under the agreement would bear interest at 1% above the bank's prime rate and would mature 3 years from the date of the loan. The corporation immediately borrowed $400,000 to replace the cash used in paying its January 20 note to the bank.
	January 26:	40,000 shares of common stock were issued for $350,000. $300,000 of the proceeds was used to liquidate the note payable to Orlando National Bank.
	February 1:	The financial statements for 2014 were issued.
Instructions
Prepare a partial balance sheet for Pollard Corporation, showing the manner in which the above liabilities should be presented at December 31, 2014. The liabilities should be properly classified between current and long-term, and appropriate note disclosure should be included.





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