On October 31, 2016, Lemoyne, Co., purchased $9,000 of inventory with a one-year

Question

On October 31, 2016, Lemoyne, Co., purchased $9,000 of inventory with a one-year, 8 percent note payable. Journalize the following for the company 1. Accrual of interest expense on December 31,2016 2. Payment of the note plus interest on October 31, 2017 1. Journalize the accrual of interest expense on December 31, 2016. (Record debits first, then credits. Exclude explanations from any journal entries) Journal Entry Accounts Debit Credit Date Dec 31 2. Journalize the payment of the note plus interest on October 31,2017 (Record debits first, then credits. Ex entries.) Journal Entry Debit Credit Accounts Date Oct 31

Explanation / Answer

1) Date Accounts Debit Credit Dec 31. 2016 Interest Expense $        120 Interest Payable $        120 Working: Interest expense for 2 months ending on december 31 = $       9,000 x 8% x 2/12 = $ 120 2) Date Accounts Debit Credit October 31, 2017 Interest Payable $        120 Interest Expense $        600 Notes Payable $    9,000 Cash $    9,720 Working: Interest expense for 10 months ending on October 31 = $       9,000 x 8% x 10/12 = $ 600

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