Prepare the appropriate journal entries for 2013 transaction

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Reference no: EM13123709

Grossman Products began operations in 2013. The following selected transactions occurred from September 2013 through March 2014. Grossman's fiscal year ends on December 31.

2013:
(a) On September 5, Grossman opened a checking account and negotiated a short-term line of credit of up to $10,000,000 at 10% interest. The company is not required to pay any commitment fees.

(b) On October 1, Grossman borrowed a $8,000,000 cash and issued a 5-month promissory note with 10% interest payable at maturity.

(d) For the September through December period, sales totaled $5,000,000. The state sales tax rate is 4% and 75% of sales are subject to sales tax

(e) Grossman recorded accrued interest

2014:

(f) Grossman paid the promissory note on the March 1 due date.

(g) Half of the storage containers are returned in March, with the other half expected to be returned over the next 6 months.

Required:

1. Prepare the appropriate journal entries for the 2013 transactions

2. Prepare the liability section of the balance sheet at December 31, 2013, based on the data supplied.

Reference no: EM13123709

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