Camden Biotechnology began operations in September 2018. Thefollowing selected transactions relate to liabilities of thecompany for September 2018 through March 2019. Camden’s fiscal yearends on December 31. Its financial statements are issued inApril.
2018
- On September 5, opened checking accounts at Second CommercialBank and negotiated a short-term line of credit of up to$19,000,000 at the bank’s prime rate (12.5% at the time). Thecompany will pay no commitment fees.
- On October 1, borrowed $16 million cash from Second CommercialBank under the line of credit and issued a five-month promissorynote. Interest at the prime rate of 12% was payable at maturity.Management planned to issue 10-year bonds in February to repay thenote.
- Received $3,500 of refundable deposits in December for reusablecontainers used to transport and store chemical-basedproducts.
- For the September–December period, sales on account totaled$4,140,000. The state sales tax rate is 3% and the local sales taxrate is 3%. (This is a summary journal entry for the manyindividual sales transactions for the period.)
- Recorded the adjusting entry for accrued interest.
2019
- In February, issued $12.4 million of 10-year bonds at facevalue and paid the bank loan on the March 1 due date.
- Half of the storage containers covered by refundable depositswere returned in March. The remaining containers are expected to bereturned during the next six months.
Required:
1. Prepare the appropriate journal entries for2018 and 2019 transactions.
