A business issued a 30-day, 7% note for $67,200 to a creditor on account. The company uses a 360-day year for interest calculations. Required: Journalize the entries to record (a) the issuance of the note on April 30 and (b) the payment of the note at maturity, including interest. Refer to the Chart of Accounts for exact wording of account titles. Chart Of Accounts CHART OF ACCOUNTS General Ledger ASSETS110Cash111Accounts Receivable112Interest Receivable113Notes Receivable115Merchandise Inventory116Supplies118Prepaid Insurance120Land123Building124Accumulated Depreciation-Building125Office Equipment126Accumulated Depreciation-Office Equipment LIABILITIES210Accounts Payable213Interest Payable214Notes Payable215Salaries Payable216Social Security Tax Payable217Medicare Tax Payable218Employees Federal Income Tax Payable219Employees State Income Tax Payable220Medical Insurance Payable221Retirement Savings Deductions Payable222Union Dues Payable224Federal Unemployment Tax Payable225State Unemployment Tax Payable226Vacation Pay Payable228Product Warranty Payable EQUITY310Common Stock311Retained Earnings312Dividends313Income Summary REVENUE410Sales610Interest Revenue EXPENSES510Cost of Merchandise Sold520Salaries Expense525Delivery Expense526Repairs Expense531Rent Expense533Insurance Expense534Supplies Expense535Payroll Tax Expense536Vacation Pay Expense538Cash Short and Over539Product Warranty Expense541Depreciation Expense-Building542Depreciation Expense-Office Equipment590Miscellaneous Expense710Interest Expense General Journal Journalize the entries to record (a) the issuance of the note on April 30 and (b) the payment of the note at maturity, including interest. Refer to the Chart of Accounts for exact wording of account titles.PAGE 1 JOURNAL DATEDESCRIPTIONPOST. REF.DEBITCREDIT1 2 3 4 5

Solution: Issuance of note to a creditor on accounts means note is issued to a creditor for their amount payable. At maturity of note both the principal and interest amounts are paid. Journal entries are as under: Date Account Titles Debit Credit 30-Apr Accounts payable $67,200 Notes payable $67,200 30-May Notes payable $67,200 Interest expense (67200*7%*30/360) $392 cash $67,592

Answered: sued a 30-day, 7% note for $67,200 to a…

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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A business issued a 30-day, 7% note for $67,200 to a creditor on account. The company uses a 360-day year for interest calculations.

	Required:
	Journalize the entries to record (a) the issuance of the note on April 30 and (b) the payment of the note at maturity, including interest. Refer to the Chart of Accounts for exact wording of account titles.

Chart Of Accounts

CHART OF ACCOUNTS

General Ledger

	ASSETS
110	Cash
111	Accounts Receivable
112	Interest Receivable
113	Notes Receivable
115	Merchandise Inventory
116	Supplies
118	Prepaid Insurance
120	Land
123	Building
124	Accumulated Depreciation-Building
125	Office Equipment
126	Accumulated Depreciation-Office Equipment

	LIABILITIES
210	Accounts Payable
213	Interest Payable
214	Notes Payable
215	Salaries Payable
216	Social Security Tax Payable
217	Medicare Tax Payable
218	Employees Federal Income Tax Payable
219	Employees State Income Tax Payable
220	Medical Insurance Payable
221	Retirement Savings Deductions Payable
222	Union Dues Payable
224	Federal Unemployment Tax Payable
225	State Unemployment Tax Payable
226	Vacation Pay Payable
228	Product Warranty Payable

	EQUITY
310	Common Stock
311	Retained Earnings
312	Dividends
313	Income Summary

	REVENUE
410	Sales
610	Interest Revenue

	EXPENSES
510	Cost of Merchandise Sold
520	Salaries Expense
525	Delivery Expense
526	Repairs Expense
531	Rent Expense
533	Insurance Expense
534	Supplies Expense
535	Payroll Tax Expense
536	Vacation Pay Expense
538	Cash Short and Over
539	Product Warranty Expense
541	Depreciation Expense-Building
542	Depreciation Expense-Office Equipment
590	Miscellaneous Expense
710	Interest Expense

General Journal

Journalize the entries to record (a) the issuance of the note on April 30 and (b) the payment of the note at maturity, including interest. Refer to the Chart of Accounts for exact wording of account titles.

PAGE 1

JOURNAL

	DATE	DESCRIPTION	POST. REF.	DEBIT	CREDIT
1
2
3
4
5

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