Richmond Company engaged in the following transactions during 2009:
a. Purchased $16,000 of merchandise on February 16. The seller offered terms of 1/10, n/15.
b. Paid for the purchased merchandise (transaction a) on February 26.
c. Borrowed $140,000 on a 10-month, 9 percent interest-bearing note on April 30.
d. Purchased $28,000 of merchandise on June 4. The seller offered terms of 2/15, n/20.
e. Paid for the purchased merchandise (transaction d) on June 24.
f. Received from Haywood, Inc., on August 19 a $12,000 deposit against a total selling price of $120,000 for merchandise to be manufactured for Haywood.
g. Paid quarterly installments of Social Security and individual federal income tax withholdings, as shown below, on October 15. The Social Security was recorded as an expense during the quarter, and the amount paid represents both the employee and employer share (50% each).
Social Security tax ……………………………..$116,000
Federal income tax withheld ………………….. 419,000
Assume that Richmond records inventory using the gross method.
1. Prepare journal entries for these transactions.
2. Prepare any adjusting entries necessary at December 31, 2009.