Answered: Journal Entries for Accounts and 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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Question

Journal Entries for Accounts and Notes Payable
Simon Company had the following transactions:

Apr.	15	Issued a $6,000, 60-day, 8 percent note payable in payment of an account with Marion Company.
May	22	Borrowed $45,000 from Sinclair Bank, signing a 60-day note at nine percent.
Jun.	14	Paid Marion Company the principal and interest due on the April 15 note payable.
Jul.	13	Purchased $15,000 of merchandise from Sharp Company; signed a 90-day note with ten percent interest.
Jul.	21	Paid the May 22 note due Sinclair Bank.
Oct.	2	Borrowed $38,000 from Sinclair Bank, signing a 120-day note at 12 percent.
Oct.	11	Defaulted on the note payable to Sharp Company.

Required

a. Record these transactions in general journal form.
b. Record any adjusting entries for interest in general journal form. Simon Company has a December 31 year-end.

Round answers to nearest dollar. Use 360 days for interest calculations.

a.

General Journal
Date	Description	Debit	Credit
Apr.15

	Issued a 60-day, 8 percent note payable in payment of an account payable.
May 22

	Borrowed from bank for 60 days at 9 percent.
Jun.14
	Interest Expense

	Paid note payable to Marion Company.
Jul.13

	Purchased merchandise and issued a note payablewith interest at 10 percent for 90 days.
Jul.21
	Interest Expense

	Paid note payable to Sinclair Bank.
Oct.2

	Borrowed from bank for 120 days at 12 percent.

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