1.
Identify the maturity date for each of the three notes described.
1.

Explanation of Solution
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.
Maturity date:
The date on which the borrower should pay the principal amount of loan, or bond, is referred to as maturity date.
Particulars | Company F | Bank S | Bank C |
Date of note | 23rd May | 15th July | 6th December |
Terms of the note ( in days) | 60 | 120 | 45 |
Maturity date | 22nd July | 12th November | 20th January |
(Table 1)
2.
Identify the interest due at maturity for each of the three notes.
2.

Explanation of Solution
Calculate the interest due at maturity for the note bearing an amount of $4,600.
Therefore, the interest due at maturity for the note bearing an amount of $4,600 is $115.
Calculate the interest due at maturity for the note bearing an amount of $12,000.
Therefore, the interest due at maturity for the note bearing an amount of $12,000 is $400.
Calculate the interest due at maturity for the note bearing an amount of $8,000.
Therefore, the interest due at maturity for the note bearing an amount of $8,000 is $90.
3.
Identify the interest expense to be recorded in the
3.

Explanation of Solution
Therefore, the interest expense recorded in the adjusting entry at the end of Year 1 is $50.
4.
Identify the interest expense to be recorded in Year 2.
4.

Explanation of Solution
Therefore, the interest expense recorded in Year 2 is $40.
Prepare

Explanation of Solution
Date | Account title and Explanation | Debit in $ | Credit in $ |
April 22, Year 1 | Merchandise inventory | 5,000 | |
Accounts payable to Company F | 5,000 | ||
(To record the purchase of merchandise on credit) | |||
May 23 | Accounts payable to Company F | 5,000 | |
Cash | 400 | ||
Notes payable-Company F | 4,600 | ||
(Paid $400 cash and gave a 60-day, 15% note to extend due date on account) | |||
July 15 | Cash | 12,000 | |
Notes payable –Bank S | 12,000 | ||
(Borrowed cash with a 120-day, 10% note.) | |||
July 22 | Interest expense | 115 | |
Notes payable –Company F | 4,600 | ||
Cash | 4,715 | ||
(Paid note with interest.) | |||
November 12 | Interest expense | 400 | |
Notes payable –Bank S | 12,000 | ||
Cash | 12,400 | ||
(Paid note with interest.) | |||
December 6 | Cash | 8,000 | |
Notes payable –Bank C | 8,000 | ||
(Borrowed cash with 45-day, 9% note.) | |||
December 31 | Interest expense | 50 | |
Interest payable | 50 | ||
(Accrued interest on note payable.) | |||
January 20, Year 2 | Interest expense | 40 | |
Notes payable- Bank C | 8,000 | ||
Interest payable | 50 | ||
Cash | 8,090 | ||
(Paid note with interest.) |
(Table 2)
Want to see more full solutions like this?
Chapter 11 Solutions
Principles of Financial Accounting.
- Please given correct answer for General accounting question I need step by step explanationarrow_forwardThe following VAT balances were extracted from the subsidiary journals of Africa Traders as at 28 February 2024. R Cash receipts journal VAT input 556,50 VAT output 14 676,48 Cash payments journal VAT input 9 375,12 VAT output 642,78 Purchases journal VAT 6 260,40 Sales journal VAT 8 037,12 Purchases returns journal VAT 871,75 Sales returns journal VAT 902,32 On 1 February 2024, the VAT input account had a debit opening balance of R14 768 and the VAT output account had a credit opening balance of R14 154. Calculate the closing balance of the VAT output account as at 28 February 2024arrow_forwardHelp me tutor to solve questions. Give correct general accounting answerarrow_forward
- Hi expert please given correct answer with accountingarrow_forwardVista Motors has a total asset turnover of 2.9, a net profit margin of 6.25 percent, and an equity multiplier of 3.6. Calculate Vista's return on equity (ROE) using the DuPont equation. (Financial accounting)arrow_forwardWhat is the gross margin? Financial accountingarrow_forward
- Principles of Accounting Volume 1AccountingISBN:9781947172685Author:OpenStaxPublisher:OpenStax College