During the fiscal year ended 31 December, Black Crows Ltd carried out the following transactions involving notes payable: Aug. 6 Borrowed $11,200 from The Doors Ltd issuing to them a 45-day, 5% note payable. Sep. 16 Purchased office equipment from Sofa Ltd. The invoice amount was $16,800 and Sofa Ltd agreed to accept as full payment a 5%, 3-month note for the invoice amount. Sep. 20 Paid the note payable due to The Doors Ltd plus accrued interest. Nov. 1 Borrowed $235,000 from Bank of Cyprus at an interest rate of 5% per annum; signed a 90-day note payable. Dec. 1 Purchased merchandise in the amount of $3,000 from Helios Ltd. Gave in settlement a 90-day interest-bearing note at 6%. Dec. 16 The $16,900 note payable to Sofa Ltd matured. The company paid the interest accruing and issued a new 30-day 5% note to replace the maturing note. Required: a. Prepare journal entries to record the above transactions. b. Prepare the adjusting entry needed at 31 December to accrue interest owed on notes payable. Assume that adjusting entries are made annually (you can use 1 entry for all 3 notes).

During the fiscal year ended 31 December, Black Crows Ltd carried out the following transactions involving notes payable: Aug. 6 Borrowed $11,200 from The Doors Ltd issuing to them a 45-day, 5% note payable. Sep. 16 Purchased office equipment from Sofa Ltd. The invoice amount was $16,800 and Sofa Ltd agreed to accept as full payment a 5%, 3-month note for the invoice amount. Sep. 20 Paid the note payable due to The Doors Ltd plus accrued interest. Nov. 1 Borrowed $235,000 from Bank of Cyprus at an interest rate of 5% per annum; signed a 90-day note payable. Dec. 1 Purchased merchandise in the amount of $3,000 from Helios Ltd. Gave in settlement a 90-day interest-bearing note at 6%. Dec. 16 The $16,900 note payable to Sofa Ltd matured. The company paid the interest accruing and issued a new 30-day 5% note to replace the maturing note. Required: a. Prepare journal entries to record the above transactions. b. Prepare the adjusting entry needed at 31 December to accrue interest owed on notes payable. Assume that adjusting entries are made annually (you can use 1 entry for all 3 notes).

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Cash Book

So, before coming to the topic of cash books, I will let you briefly explain about the cash so that you all can be familiar with the word cash. Cash comes under the category of the current asset which is used as a medium of exchange for all the financial transactions in the firm. Cash is something that is universally accepted as a mode of payment. So, now comes to the topic i.e., cash book.

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During the fiscal year ended 31 December, Black Crows Ltd carried out the following transactions
involving notes payable:
Aug. 6 Borrowed $11,200 from The Doors Ltd issuing to them a 45-day, 5% note payable.
Sep. 16 Purchased office equipment from Sofa Ltd. The invoice amount was $16,800 and Sofa Ltd
agreed to accept as full payment a 5%, 3-month note for the invoice amount.
Sep. 20 Paid the note payable due to The Doors Ltd plus accrued interest.
Nov. 1 Borrowed $235,000 from Bank of Cyprus at an interest rate of 5% per annum; signed a 90-day
note payable.
Dec. 1 Purchased merchandise in the amount of $3,000 from Helios Ltd. Gave in settlement a 90-day
interest-bearing note at 6%.
Dec. 16 The $16,900 note payable to Sofa Ltd matured. The company paid the interest accruing and
issued a ew 30-day 5% note to replace the maturing note.
Required:
a. Prepare journal entries to record the above transactions.
b. Prepare the adjusting entry needed at 31 December to accrue interest owed on notes payable.
Assume that adjusting entries are made annually (you can use 1 entry for all 3 notes).

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Accounting for Cash and cash equivalents

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