Required a. Record these transactions in general journal form. b. Record any adj
ID: 2521881 • Letter: R
Question
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.
Apr. 8 Issued a $48,000, 75-day, 8% note payable in payment of an account with Bennett Company. May 15 Borrowed $360,000, 60-day, 9% note from Lincoln Bank. Jun. 22 Paid Bennett Company the principal and interest due on the April 8 note payable. Jul. 6 Purchased $120,000 of merchandise from Bolton Company; signed a note for 90-day, 10% interest. Jul. 14 Paid the May 15 note due Lincoln Bank. Oct. 2 Borrowed $240,000, 120-day, 12% note from Lincoln Bank. Oct. 4 Defaulted on the note payable to Bolton Company.Explanation / Answer
Answers
Working
Bennet Company
Lincon Bank
Bolton Company
Lincoln Bank
A
Date of Issue
08-Apr
15-May
06-Jul
02-Oct
B
Amount
$ 48,000.00
$ 3,60,000.00
$ 1,20,000.00
$ 2,40,000.00
C
Term [days]
75
60
90
120
D=A + C
Maturity date
22-Jun
14-Jul
04-Oct
30-Jan
E
Interest rate
8%
9%
10%
12%
F= B x E
Annual interest
$ 3,840.00
$ 32,400.00
$ 12,000.00
$ 28,800.00
G = F x C/360
Interest expense for notes term
$ 800.00
$ 5,400.00
$ 3,000.00
$ 9,600.00
Date
General Journal
Debit
Credit
08-Apr
Accounts payable
$ 48,000.00
Notes payable
$ 48,000.00
(notes issued)
15-May
Cash
$ 3,60,000.00
Notes payable
$ 3,60,000.00
(notes issued)
22-Jun
Notes payable
$ 48,000.00
Interest expense
$ 800.00
Cash
$ 48,800.00
(notes repaid)
06-Jul
Inventory
$ 1,20,000.00
Notes payable
$ 1,20,000.00
(notes issued for purchase of inventory)
14-Jul
Notes payable
$ 3,60,000.00
Interest expense
$ 5,400.00
Cash
$ 3,65,400.00
(notes repaid)
02-Oct
Cash
$ 2,40,000.00
Notes payable
$ 2,40,000.00
(notes issued)
04-Oct
Notes payable
$ 1,20,000.00
Interest expense
$ 3,000.00
Accounts payable
$ 1,23,000.00
(defaulted in Notes payable)
Date
General Journal
Debit
Credit
31-Dec
Interest expense [9600 x 90/120days]
$ 7,200.00
Interest payable
$ 7,200.00
[interest accrued on Oct 2 Note payable recorded]
Working
Bennet Company
Lincon Bank
Bolton Company
Lincoln Bank
A
Date of Issue
08-Apr
15-May
06-Jul
02-Oct
B
Amount
$ 48,000.00
$ 3,60,000.00
$ 1,20,000.00
$ 2,40,000.00
C
Term [days]
75
60
90
120
D=A + C
Maturity date
22-Jun
14-Jul
04-Oct
30-Jan
E
Interest rate
8%
9%
10%
12%
F= B x E
Annual interest
$ 3,840.00
$ 32,400.00
$ 12,000.00
$ 28,800.00
G = F x C/360
Interest expense for notes term
$ 800.00
$ 5,400.00
$ 3,000.00
$ 9,600.00
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