Question. Jamaica Corporation carried out the following transactions involving note payable. During the fiscal year ended December 31, 2020. Aug 6 Borrowed $ 15,200 from Tony Stark, issuing to him a 45 da, 14% note payable. Sept. 16 Purchased office equipment from Ikea Company. The invoice amount was $18,800 and Ikea Company agreed to accept as full payment a 3-month, 15% note for the invoice amount. Sept. 20 Paid Tony Stark note plus accrued interest. Nov.1 Borrowed $ 2,35,000 from Nation Commercial Bank at an interest rate of 12% per annum; signed a 90-days note payable for $ 2,42,256, which included a $7,056 interest charge in the face amount. Dec.1 Purchased merchandise in the amount of $13,000 from Stephens & Co. Gave in settlement a 60-day note nearing interest at 15% (Perpetual inventory system is deployed). Dec. 16 The $18,800 note payable to Ikea Company matured today. Paid the interest accrued and issued new 30-days, 12% note to replace the maturing note. Required: Prepare entries in general Journal form to record the above transactions. Use a 360-day year in making the interest calculations. Prepare the adjusting entries needed at December 31st, prior closing the accounts. Use one entry for two notes on which interest is stated separately and a separate entry for Fintiba Bank note in which interest is included in the face amount of the note.

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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Jamaica Corporation carried out the following transactions involving note payable. During the fiscal year ended December 31, 2020.

Aug 6 Borrowed $ 15,200 from Tony Stark, issuing to him a 45 da, 14% note payable.

Sept. 16 Purchased office equipment from Ikea Company. The invoice amount was $18,800 and Ikea Company agreed to accept as full payment a 3-month, 15% note for the invoice amount.

Sept. 20 Paid Tony Stark note plus accrued interest.

Nov.1 Borrowed $ 2,35,000 from Nation Commercial Bank at an interest rate of 12% per annum; signed a 90-days note payable for $ 2,42,256, which included a $7,056 interest charge in the face amount.

Dec.1 Purchased merchandise in the amount of $13,000 from Stephens & Co. Gave in settlement a 60-day note nearing interest at 15% (Perpetual inventory system is deployed).

Dec. 16 The $18,800 note payable to Ikea Company matured today. Paid the interest accrued and issued new 30-days, 12% note to replace the maturing note.

Required:

Prepare entries in general Journal form to record the above transactions. Use a 360-day year in making the interest calculations.
Prepare the adjusting entries needed at December 31^st, prior closing the accounts. Use one entry for two notes on which interest is stated separately and a separate entry for Fintiba Bank note in which interest is included in the face amount of the note.

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