nment CALCULATOR FULL SCREEN PRINTER VERSION BACK NEXT Exercise 10-1 | Kelly Jon

Question

nment CALCULATOR FULL SCREEN PRINTER VERSION BACK NEXT Exercise 10-1 | Kelly Jones and Tami Crawford borrowed $30,000 on a 7-month, 5% note from Gem State Bank to open their business, JC's Coffee House. The money was borrowed on June 1, 2017, and the note matures January 1, 2018. Prepare the entry to record the receipt of the funds from the loan. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit June 1 Prepare the entry to accrue the interest on ?une 30. (credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit June 30 Assuming adjusting entries are made at the end of each month, determine the balance in the interest payable account at December 31, 2017 Balance in interest payable accounts 8:38

Explanation / Answer

Journal entry :

Balance in interest payable account = 125*7 = 875

Journal entry :

Date accounts & explanation debit credit June 1,2017 Cash 30000     Notes payable 30000 (To record amount borrow) June 30,2017 Interest expense (30000*5%*1/12) 125     Interest payable 125 (To record accured interest)

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