C.S. Lewis Company had the following transactions involving notes payable. July

Question

C.S. Lewis Company had the following transactions involving notes payable.

July 1, 2015 Borrows $51,000 from First National Bank by signing a 9-month, 8% note.

Nov. 1, 2015 Borrows $61,800 from Lyon County State Bank by signing a 3-month, 6% note.

Dec. 31, 2015 Prepares adjusting entries.

Feb. 1, 2016 Pays principal and interest to Lyon County State Bank.

Apr. 1, 2016 Pays principal and interest to First National Bank. Prepare journal entries for each of the transactions.

Question: Prepare journal entries for each of the transactions.

Explanation / Answer

Journal Entries

Date Account Titles and Explanations Debit($) Credit($) July 1 Bank A/c Dr. $51000 To 8% Note payable A/c $51000 Nov.1 Bank A/c Dr. $61800 To 6% Note payable A/c $61800 Interest expense on 8% Note payable = 51000x8%x0.5 = 2040 Interest expense on 6% note payable = 61800x6%x2/12 = 618 Dec 31. Interest Expenses A/c Dr. 2658 To Interest Payable A/c 2658 Feb1,2016 6% note payable A/c Dr. 61800 Interest Expense A/c Dr. 309 Interest payable A/c Dr. 618 To Bank A/c 62727 Apr1.2016 8% Note payable 51000 Interest Expense A/c Dr. 1020 Interest Payable A/c Dr. 2040 To Bank A/c 54060

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