Chapter 11, Problem 3E

To determine

Concept Introduction:

Notes Payable:

Notes Payable are long term negotiable instruments of debt issued by corporate entities to secure funds from the public These funds are used to either fund long term capital expenditure or similar long term investment opportunities.

Notes Payable represent steady income for the investor in the form of periodic interest payments by the entity issuing the bond.

Notes Payable are issued at par (at face value), at premium (at higher than face value) or at a discount (at lower than face value).

Requirement 1:

Maturity Date of 90 Day Notes Payable undertaken on May 15.

To determine

Concept Introduction:

Notes Payable:

Notes Payable are long term negotiable instruments of debt issued by corporate entities to secure funds from the public These funds are used to either fund long term capital expenditure or similar long term investment opportunities.

Notes Payable represent steady income for the investor in the form of periodic interest payments by the entity issuing the bond.

Notes Payable are issued at par (at face value), at premium (at higher than face value) or at a discount (at lower than face value).

Journal Entries:

Journal entries are the first step in recording financial transactions and preparation of financial statements.

These represent the impact of the financial transaction and demonstrate the effect on the accounts impacted in the form of debits and credits.

Assets and expenses have debit balances and Liabilities and Incomes have credit balances and according to the business transaction, the accounts are appropriately debited will be credited by credited to reflect the effect of business transactions and events.

Requirement 2:

Journal Entry to record issuance of Notes Payable, interest payable and repayment of Notes Payable