Chapter 11, Problem E11.15E

To determine

Accounting for Short Notes payable:

When the notes payable are issued for the short term period (i.e. a period below 12 months) against the purchase of inventory, purchase of equipment or any other purposes, the such notes payable shall be recorded as liability for the period and interest accrued on such notes payable shall be treated as expense for the period for which the interest has been accrued.

Requirement1:

The Journal entry for purchase of Equipment.

To determine

Requirement2:

The entry for the accrual of interest on notes payable at the end of accounting year.

To determine

Requirement3:

The entry for payment of Interest and notes payable on due date.