Question

Problem 10-2A Cling-on Ltd. sells rock-climbing products and also operates an indoor climbing facility for climbing enthusiasts. On July 1, 2018, Cling-on received a three-month $12,400 bank loan from City Credit Union due on September 30, 2018, and bearing interest at 3%. Interest is payable at maturity. Note that the company records adjusting entries annually at its year end, December 31 During the next four months, Cling-on incurred the following: Sept. 1 Purchased inventory on account for $14,300 from Black Diamond, terms n/30. The company uses a perpetual inventory system 30 Repaid the $12,400 bank loan payable to City Credit Union (see opening balance), as well as any interest owed. Oct. 1 Issued a six-month, 4%, $14,300 note payable to Black Diamond in exchange for the account payable (see September 1 transaction). Interest is payable on the first of each month. Borrowed $24,800 from Montpelier Bank for 12 months at 3% to finance the building of a new climbing area for advanced climbers. (Use the asset account Buildings.) Interest is payable monthly on the first of each month. 2 Nov. 1 Paid interest on the Black Diamond note and Montpelier Bank loan. Dec. 1 Paid interest on the Black Diamond note and Montpelier Bank loan 3 Purchased a vehicle for $25,700 from Auto Dealer Ltd. to transport clients to nearby climbing sites. Paid $7,900 as a down payment and borrowed the remainder from Atlantic Bank for 12 months at 3%. Interest is payable quarterly, at the end of each quarter. 31 Recorded accrued interest for the Black Diamond note and the Montpelier and Atlantic loans.

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Answer 1

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