Adjusting Entries for Interest At December 31 of Year 1, Portland Corporation had two notes payable outstanding (notes 1 and 2). At December 31 of Year 2, Portland also had two notes payable outstanding (notes 3 and 4). These notes are described below. December 31, Year 1 Note 1 Note 2 December 31, Year 2 Note 3 Note 4 Date of note November 25, Year 1 December 16, Year 1 December 11, Year 2 December 07, Year 2 Principal Amount Interest Rate Number of Days $27,000 16,800 15,400 18,000 8% 9% 9% 10% 90 60 120 90 Required a. Prepare the adjusting entries for interest at December 31 of Year 1. b. Assume that the adjusting entries were made at December 31 of Year 1, and that no adjusting entries were made during Year 2. Prepare the Year 2 journal entries to record payment of the notes that were outstanding at December 31 of Year 1. c. Prepare the adjusting entries for interest at December 31 of Year 2. Round answers to nearest dollar. Use 360 days for interest calculations when applicable.
Adjusting Entries for Interest At December 31 of Year 1, Portland Corporation had two notes payable outstanding (notes 1 and 2). At December 31 of Year 2, Portland also had two notes payable outstanding (notes 3 and 4). These notes are described below. December 31, Year 1 Note 1 Note 2 December 31, Year 2 Note 3 Note 4 Date of note November 25, Year 1 December 16, Year 1 December 11, Year 2 December 07, Year 2 Principal Amount Interest Rate Number of Days $27,000 16,800 15,400 18,000 8% 9% 9% 10% 90 60 120 90 Required a. Prepare the adjusting entries for interest at December 31 of Year 1. b. Assume that the adjusting entries were made at December 31 of Year 1, and that no adjusting entries were made during Year 2. Prepare the Year 2 journal entries to record payment of the notes that were outstanding at December 31 of Year 1. c. Prepare the adjusting entries for interest at December 31 of Year 2. Round answers to nearest dollar. Use 360 days for interest calculations when applicable.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Subject:- Accounting
Transcribed Image Text:Adjusting Entries for Interest
At December 31 of Year 1, Portland Corporation had two notes payable outstanding (notes 1 and 2). At December
31 of Year 2, Portland also had two notes payable outstanding (notes 3 and 4). These notes are described below.
December 31, Year 1
Note 1
Note 2
December 31, Year 2
Note 3
Note 4
Required
Date of note
November 25, Year 1
December 16, Year 1
December 11, Year 2
December 07, Year 2
Principal Amount Interest Rate Number of Days
$27,000
16,800
15,400
18,000
8%
9%
9%
10%
90
60
120
90
a. Prepare the adjusting entries for interest at December 31 of Year 1.
b. Assume that the adjusting entries were made at December 31 of Year 1, and that no adjusting entries were
made during Year 2. Prepare the Year 2 journal entries to record payment of the notes that were outstanding at
December 31 of Year 1.
c. Prepare the adjusting entries for interest at December 31 of Year 2.
Round answers to nearest dollar. Use 360 days for interest calculations when applicable.
Transcribed Image Text:Date
a.
Dec.31
Dec.31
General Journal
Dec.31
Description
Dec.31
To record interest on note 1.
b.
Feb.14 Notes Payable
Notes Payable
Interest Expense
+
To accrue interest on note 2.
To record payment of Note 2.
Feb.23 Notes Payable
Interest Expense
To record payment of Note 1.
+
To record interest on Note 3.
To record interest on Note 4.
Debit
$
Credit
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 3 steps with 2 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education