Exercise 10-1 C.S. Lewis Company had the following transactions involving notes

Question

Exercise 10-1 C.S. Lewis Company had the following transactions involving notes payable July 1, 2017 Borrows $57,500 from First National Bank by signing a 9-month, 8% note. Nov. 1, 2017 Borrows $69,000 from Lyon County State Bank by signing a 3-month, 6% note. Dec. 31, 2017 Prepares adjusting entries Feb. 1, 2018 Pays principal and interest to Lyon County State Bank. Apr. 1, 2018 Pays principal and interest to First National Bank. Prepare journal entries for each of the transactions. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Record journal entries in the order presented in the problem.)

Explanation / Answer

Journal entry :

Date accounts & explanation debit credit July 1,2017 Cash 57500 Notes payable 57500 (To record borrow amount) Nov 1,2019 Cash 69000 Notes payable 69000 (To record borrow amount) Dec 31,2019 Interest expense (57500*8%*6/12) 2300 Interest payable 2300 (To record adjusting entry for first national bank note) Dec 31,2019 Interest expense 690 Interest payable (69000*6%*2/12) 690 (To record adjusting entry for Lyon country state bank note) Feb 1,2018 Notes payable 69000 Interest payable 690 Interest expense 345 Cash 70035 (To record note paid) Apr 1,2018 Notes payable 57500 Interest payable 2300 Interest expense 1150 Cash 60950 (To record notes repaid)

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