Journal Entries for Accounts and Notes Payable Logan Company had the following t

Question

Journal Entries for Accounts and Notes Payable Logan Company had the following transactions: Apr. 8 Issued a $5,000, 60-day, six percent note payable in payment of an account with Bennett Company. May 15 Borrowed $40,000 from Lincoln Bank, signing a 60-day note at nine percent. Jun. 7 Paid Bennett Company the principal and interest due on the April 8 note payable. ul. 6 Purchased $12,000 of merchandise from Bolton Company; signed a 90-day note with ten percent interest. Jul. 14 Paid the May 15 note due Lincoln Bank. Oct. 2 Borrowed $30,000 from Lincoln Bank, signing a 120-day note at 12 percent. Oct. 4 Defaulted on the note payable to Bolton Company Required a. Record these transactions in general journal form. b. Record any adjusting entries for interest in general journal form. Logan Company has a December 31 year-end. Round answers to nearest dollar. Use 360 days for interest calculations.

Explanation / Answer

Journal Entries Date Account Title and explanation Debit Credit Apr, 08 Benner Company $                     5,000       To 6% Note $                       5,000 (To record the issue of 6% note) May, 15 Cash $                  40,000       To 9% Note $                     40,000 (To Record the amount borrowed against 9% note) 6% Note $                     5,000 June , 07 Interest on Note (5000 X 6% X 60/360 Days) $                           50          To Cash $                       5,050 (To Record the payment of note with interest) July , 06 Merchandise $                  12,000       To 10% Note $                     12,000 (To record the note payable agaisnt purchase of merchandise) July , 14 9% Note $                  40,000 Interest on Note (40,000 X 9% X 60/360) $                        600 Oct, 02 Cash $                  30,000       To 12% Note $                     30,000 (To Record the borrowed money) Oct, 04 "No Entry is required for Defaulted note payable) Interest Expenses $                     1,200 Dec , 31      To Interest Payable $                       1,200 (To record the interest payable against issue of notes) Interest of Bolton Company = 12000 *10%*90/360 = $                        300 Interest of Lincoln Bank = 90 Days till Dec 31 = 30000 * 12% *90/360 = $                        900 Total Expenses $                     1,200

Related Questions

Navigate

• Browse (All)
• Browse J
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.