Camden Biotechnology began operations in September 2018. Thefollowing selected transactions relate to liabilities of thecompany for September 2018 through March 2019. Camdenâs fiscal yearends on December 31. Its financial statements are issued in April.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 bankâs prime rate (12.5% at the time). Thecompany will pay no commitment fees. On October 1, borrowed $16million cash from Second Commercial Bank under the line of creditand issued a five-month promissory note. Interest at the prime rateof 12% was payable at maturity. Management planned to issue 10-yearbonds in February to repay the note. Received $3,500 of refundabledeposits in December for reusable containers used to transport andstore chemical-based products. For the SeptemberâDecember period,sales on account totaled $4,140,000. The state sales tax rate is 3%and the local sales tax rate is 3%. (This is a summary journalentry for the many individual sales transactions for the period.)Recorded the adjusting entry for accrued interest. 2019 InFebruary, issued $12.4 million of 10-year bonds at face value andpaid the bank loan on the March 1 due date. Half of the storagecontainers covered by refundable deposits were returned in March.The remaining containers are expected to be returned during thenext six months. Required: 1. Prepare the appropriate journalentries for 2018 and 2019 transactions. 2. Prepare the current andlong-term liability sections of the December 31, 2018, balancesheet. Trade accounts payable on that date were $347,000.
Camden Biotechnology began operations in September 2018. Thefollowing selected transactions relate to liabilities of thecompany for September 2018 through March 2019. Camdenâs fiscal yearends on December 31. Its financial statements are issued in April.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 bankâs prime rate (12.5% at the time). Thecompany will pay no commitment fees. On October 1, borrowed $16million cash from Second Commercial Bank under the line of creditand issued a five-month promissory note. Interest at the prime rateof 12% was payable at maturity. Management planned to issue 10-yearbonds in February to repay the note. Received $3,500 of refundabledeposits in December for reusable containers used to transport andstore chemical-based products. For the SeptemberâDecember period,sales on account totaled $4,140,000. The state sales tax rate is 3%and the local sales tax rate is 3%. (This is a summary journalentry for the many individual sales transactions for the period.)Recorded the adjusting entry for accrued interest. 2019 InFebruary, issued $12.4 million of 10-year bonds at face value andpaid the bank loan on the March 1 due date. Half of the storagecontainers covered by refundable deposits were returned in March.The remaining containers are expected to be returned during thenext six months. Required: 1. Prepare the appropriate journalentries for 2018 and 2019 transactions. 2. Prepare the current andlong-term liability sections of the December 31, 2018, balancesheet. Trade accounts payable on that date were $347,000.
