Chapter 11, Problem 11.4SE

Accounting for a note payable

On December 31, 2015, Franklin purchased $7,000 of merchandise inventory on a one-year, 11% note payable. Franklin uses a perpetual inventory system.

Requirements

1. Journalize the company's purchase of merchandise inventory on December 31, 2015.

2. Journalize the company's accrual of interest expense on June 30, 2016, its fiscal year-end.

3. Journalize the company's payment of the note plus interest on December 31, 2016.