Camden Biotechnology began operations in September 2018. The following selected transactions relate to liabilities of the company for September 2018 through March 2019. Camden’s fiscal year ends on December 31. Itsfinancial statements are issued in April.2018a. On September 5, opened checking accounts at Second Commercial Bank and negotiated a short-term line ofcredit of up to $15,000,000 at the bank’s prime rate (10.5% at the time). The company will pay no commitment fees.b. On October 1, borrowed $12 million cash from Second Commercial Bank under the line of credit and issueda five-month promissory note. Interest at the prime rate of 10% was payable at maturity. Management plannedto issue 10-year bonds in February to repay the note.c. Received $2,600 of refundable deposits in December for reusable containers used to transport and storechemical-based products.d. For the September–December period, sales on account totaled $4,100,000. The state sales tax rate is 3% andthe local sales tax rate is 3%. (This is a summary journal entry for the many individual sales transactions forthe period.)e. Recorded the adjusting entry for accrued interest.2019f. In February, issued $10 million of 10-year bonds at face value and paid the bank loan on the March 1 due date.g. Half of the storage containers covered by refundable deposits were returned in March. The remaining containers are expected to be returned during the next six months.Required:1. Prepare the appropriate journal entries for these transactions.2. Prepare the current and long-term liability sections of the December 31, 2018, balance sheet. Trade accountspayable on that date were $252,000
Camden Biotechnology began operations in September 2018. The following selected transactions relate to liabilities of the company for September 2018 through March 2019. Camden’s fiscal year ends on December 31. Its
financial statements are issued in April.
2018
a. On September 5, opened checking accounts at Second Commercial Bank and negotiated a short-term line of
credit of up to $15,000,000 at the bank’s prime rate (10.5% at the time). The company will pay no commitment fees.
b. On October 1, borrowed $12 million cash from Second Commercial Bank under the line of credit and issued
a five-month promissory note. Interest at the prime rate of 10% was payable at maturity. Management planned
to issue 10-year bonds in February to repay the note.
c. Received $2,600 of refundable deposits in December for reusable containers used to transport and store
chemical-based products.
d. For the September–December period, sales on account totaled $4,100,000. The state sales tax rate is 3% and
the local sales tax rate is 3%. (This is a summary
the period.)
e. Recorded the
2019
f. In February, issued $10 million of 10-year bonds at face value and paid the bank loan on the March 1 due date.
g. Half of the storage containers covered by refundable deposits were returned in March. The remaining containers are expected to be returned during the next six months.
Required:
1. Prepare the appropriate journal entries for these transactions.
2. Prepare the current and long-term liability sections of the December 31, 2018,
payable on that date were $252,000
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