Grossman Products Began Operations in 2013

question 22

Essay

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 $8,000,000 cash and issued a 5-month promissory note with 10% interest payable at maturity.
(c.) Grossman received $3,000 of refundable deposits in December for reusable containers.
(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.
3. Prepare the appropriate journal entries for the 2014 transactions.

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Definitions:

Negative Charge

A characteristic of a particle or object indicating it has more electrons than protons.

Protons

Positive-charged particles present in the core of an atom, known as subatomic particles.

Electrons

Subatomic particles with negative charge, found in all atoms and acting as the primary carrier of electricity in solids.

Atomic Number

The quantity of protons present in an atom's nucleus, which dictates the element's chemical characteristics and position within the periodic table.