Chapter 10, Problem 10.5AP

(a)

To determine

Liabilities

Liabilities are an obligation of the business to pay to the creditors in future for the goods and services purchased on account or any for other financial benefit received. It can be current liabilities or a non-current liabilities depending upon the time period in which it is paid.

Current liability

Current liability is an obligation that the companies need to pay from the remaining current assets or creation of other current liabilities within a fiscal year or the operating cycle whichever is higher.

Notes payable

Notes Payable is a written promise to pay a certain amount on a future date, with certain percentage of interest. Companies use to issue notes payable to meet short-term financing needs.

To Prepare: The journal entry transactions.

(b)

To determine

To Compute: The T-Accounts of Notes payable, Interest payable and Interest expense of Corporation E.

(c)

To determine

To Compute: The balance sheet presentation of notes payable and interest payable of Corporation E on December 31, 2019.

(d)

To determine

To Identify: The total interest expense of Corporation E using T-Accounts.