DCL Industries purchased a supply of mechanical components from E Corporation on
ID: 2503389 • Letter: D
Question
DCL Industries purchased a supply of mechanical components from E Corporation on
November 1, 2013. In payment for the $48,000 purchase, DCL issued a one-year installment note to be
paid in equal monthly payments at the end of each month. The payments include interest at the rate of
12%.
Required:
1. Prepare the journal entry for DCL's purchase of the components on November 1, 2013.
2. Prepare the journal entry for the first installment payment on November 30, 2013.
3. What is the amount of interest expense that DCL will report in its income statement for the year ended
December 31 , 2013?
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Date
General Journal
Debit
Credit
Date
General Journal
Debit
Credit
Explanation / Answer
Solution to Part (1)<?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />
Required Journal Entry:
Date
Account Title and Explanation
Post
Reference
Debit
Amount
(in $)
Credit
Amount
(in $)
2013
November 1
Components
48,000
E Corporation, Accounts Payable
48,000
(To record purchase of mechanical component from E corporation on account)
2013
November 1
E Corporation, Accounts Payable
48,000
12 % Notes Payable
48,000
(To record issue of 12% Note Payable to E corporation)
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