Reed Co. had the following transactions (see below) during November and December of 2025.Requirements:1. What amount of interest will Reed pay in 2025 (use 360 days in calculations as needed)?Record the journal entries for each of the transactions listed below.Record any necessary year-end adjusting journal entries for related to these transactions.Record the payment of the note in 2026.Transactions 1-Nov-25Issued a note to the bank with the following terms. Interest and principal paid at maturity. Days75 Interest Rate5.00% Face Amount $ 75,000.00 1-Dec-25Received $18,000 cash from a customer as an advanced payment for services to be provided and earned evenly for 1 year. 10-Dec-25Made cash sales, not including sales tax) of $ 100,000.00 Cost of goods sold for these sales of 81,000.00 Associated sales tax rate is 6% 30-Dec-25Paid the sales tax related to the Dec 10, 2025 sale.

Note payable is one of the liability being incurred in business. Regular interest payments needs to…

Answered: Reed Co. had the following transactions…

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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Reed Co. had the following transactions (see below) during November and December of 2025.

Requirements:

1. What amount of interest will Reed pay in 2025 (use 360 days in calculations as needed)?
Record the journal entries for each of the transactions listed below.
Record any necessary year-end adjusting journal entries for related to these transactions.
Record the payment of the note in 2026.

Transactions
1-Nov-25	Issued a note to the bank with the following terms. Interest and principal paid at maturity.
	Days	75
	Interest Rate	5.00%
	Face Amount	$ 75,000.00

1-Dec-25	Received $18,000 cash from a customer as an advanced payment for services to be provided and earned evenly for 1 year.



10-Dec-25	Made cash sales, not including sales tax) of	$ 100,000.00
	Cost of goods sold for these sales of	81,000.00
	Associated sales tax rate is	6%

30-Dec-25	Paid the sales tax related to the Dec 10, 2025 sale.

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