Geary Corporation had the following transactions:Apr. 15 - Issued a $6,000, 60-day, eight percent note payable in payment of an account with Marion Company.May 22 - Borrowed $50,000 from Sinclair Bank, signing a 60-day note at nine percent.June 14 - Paid Marion Company the principal and interest due on the April 15th note payable.July 13 - Purchased $15,000 of merchandise from Sharp Company; signed a 90-day note with eight percent interest.July 21 - Paid the May 22 note due to Sinclair Bank.Oct 02 - Borrowed $38,000 from Sinclair Bank, signing a 120-day note at twelve percent interest.Oct 11 - Paid the note payable and accrued interest to the Sharp Company (July 13). Record these transactions in general journal form.Record any adjusting entries for interest in general journal form. Geary Corporation has a December 31 year-end.

When a liability increases, the account is credited and when reduced the account is debited. When an asset increases, it is debited and when reduced it is credited. Expenses are recognized when incurred and are recorded by debiting it.1. Payment on account by signing a note increases as well as reduces the liability. The accounts payable balance is reduced but notes payable account is increased. 2. Borrowed cash against a note increases the cash balance as well as the notes payable liability. 3. Payment of notes reduces the notes payable and cash. Interest is paid along with the principal amount. Expense is incurred and recorded. Interest expense = $ 6,000 x 8% x 60/365 = $ 80 (rounded off) 4. Purchases against the note increases the merchandise as well as the notes payable. 5. Payment of notes reduces the notes payable and cash. Interest is paid along with the principal amount. Expense is incurred and recorded. Interest expense = $ 50,000 x 9% x 60/365 = $ 740 (rounded-off) 6. Cash borrowed from Bank by signing a note increases the cash balance as well as the notes payable liability. 7. Interest expense = $ 15,000 x 8% x 90/365 = $ 296 (rounded-off) 8. When interest is accrued, the liability increases and this increase is credited to interest payable. Expense is incurred and recognized by debiting interest expense. Interest is accrued for 90 days (Oct 2nd to December 31st). Interest expense = $ 38,000 x 12% x 90/365 = $ 1,124.

Answered: Record these transactions in general…

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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Geary Corporation had the following transactions:

Apr. 15 - Issued a $6,000, 60-day, eight percent note payable in payment of an account with Marion Company.
May 22 - Borrowed $50,000 from Sinclair Bank, signing a 60-day note at nine percent.
June 14 - Paid Marion Company the principal and interest due on the April 15^th note payable.
July 13 - Purchased $15,000 of merchandise from Sharp Company; signed a 90-day note with eight percent interest.
July 21 - Paid the May 22 note due to Sinclair Bank.
Oct 02 - Borrowed $38,000 from Sinclair Bank, signing a 120-day note at twelve percent interest.
Oct 11 - Paid the note payable and accrued interest to the Sharp Company (July 13).

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

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