Rob Judson Company had the following transactions involving notes payable. July

Question

Rob Judson Company had the following transactions involving notes payable.
July 1, 2012 Borrows $50,000 from Third National Bank by signing a 9-month, 12% note.
November 1,2012 Borrows $60,000 from DeKalb State Bank by signing a 3-month, 10% note.
December 31, 2012 Prepares adjusting entries.
February 1, 2013 Pays principal and interest to DeKalb State Bank.
April 1, 2013 Pays principal and interest to Third National Bank.

Instructions

Prepare journal entries for each of the transactions shown above. (For multiple debit/credit entries, list amounts from largest to smallest e.g. 10, 5, 3, 2.)

Date Description Debit Credit
07/1/12

11/01/12

12/31/12

(Adjusting entry for Third National Bank note.)


(Adjusting entry for DeKalb State Bank note.)
02/01/13



04/01/13

Explanation / Answer

July 1, 2012 Dr. Cash $50,000 Cr. Notes Payable $50,000 Recorded 9-month note, 12% Nov. 1, 2012 Dr. Cash $60,000 Cr. Notes Payable $60,000 Recorded 3-month note, 10% Dec. 31 Dr. Notes Interest Expense $3,000 Cr. Interest Payable $3,000 ($50,000 * 0.12 * 6/12) Dr. Notes Interest Expense $1,000 Cr. Interest Payable $1,000 ($60,000 * 0.10 * 2/12) Feb. 1, 2013 Dr. Notes Payable, DeKalb $60,000 Dr. Interest Payable $1,500 Cr. Cash $33,000 ($60,000 * 0.10 * 3/12) Apr. 1, 2013 Dr. Notes Payable, TNB $50,000 Dr. Interest Payable $4,500 Cr. Cash $54,500 ($50,000 * 0.12 * 9/12)

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