The note payable relating to the June 2, and 10 transactions is a five-year note

Question

The note payable relating to the June 2, and 10 transactions is a five-year note, with interest at the rate of 12 percent annually. Interest expense should be computed based on a 360 day year IMPORTANT NOTE: The original note on the computer equipment purchased on June 2 was S116,000. On June 10, eight days later, S22,250 was repaid. Interest expense must be calculated on the S116,000 for eight days. In addition, interest expense on the S93,750 balance of the loan (S116,000 less S22,250 S93,750) must be calculated for the 20 days remaining in the month of June June 2: A down payment of $29,000 in cash was made on additional computer equipment that was purchased for S145,000. A five-year note was executed by Byte for the balance June 10: Byte paid S22,250 on the balance it owed on the June 2 purchase of computer A Byte of Accounting, Inc Worksheet For Period Ending June 30, 2018 Account Unadjusted Trial Balance sted Trial Balance Number Name Debit Debit Credit 133 219.00 133,219.00 1120 Accounts Receivable 1130 Prepaid Insurance 1140 Prepaid Rent 1150 Office Supplies 1211 Office Equ 1212 Accum Depr.-Office E 228.00 5,472.00 3,400.00 1.700.00 2,620.00 544.64 544.64 201,260.00 1312 Accum Depr.-Computer E 1411 Building Cost 1412 Accum. Depr.-Buildin 2,629.33 2,629.33 105,000.00 105,000.00 20,000.00 1,395.00 2101 Accounts Payable 2102 Advanced Payments 2103 Interest Payable 2105 Salaries Payable 2106 Income Taxes Payable 2201 Mortoage Payable 2202 Notes Payable 3100 Capital Stock 3200 Retained Earnin 3300 Dividends 1,395.00 16,184.00 591.00 16,184.0 591.00 93,750.00 252,300.00 93,750.00 252 300.00 2,088.00 2,088.00 19,275.00 4100 Computer & Consulting Revenue 5010 Rent 5020 Salary Expense 5030 Advertising Expense 5040 Repairs & Maint Expense 5050 Oil & Gas E nse 1,700.00 1,970.00 1,190.00 1,190.00 nse 330.00 16,184.00 5090 Interest Expense 16,184.00 5100 Insurance 5120 Income Tax E ense TOTAL 479,220.00 479,220.00 27,466.22 27,466.22 504,428.22504,428.22

Explanation / Answer

Answer

Jun-02

Equipment Costs

145000

Jun-02

(-) Cash paid (down payment)

29000

Jun-02

Notes Payable amount

$116000

Jun-10

(-)Part of Notes payable repaid

22250

Jun-10

Note payable balance

$93750

Amount

Days in June

Interest expense

Jun-02

Notes payable Balance

$116000

8 days [June 2 to June 10]

309.33 [116000 x 12% x8/360]

Jun-08

Notes payable balance

$93750

20 days [June 11 to June 30]

625 [93750 x 12% x 20/360]

TOTAL Interest expense for June

$934.33

--you can round off the answer as per the instructions (if any) in question

Date

General Journal

Debit

Credit

30-Jun

Interest expense

$934.33

Interest payable

$934.33

(adjustment entry for interest expense on Notes payable)

Jun-02

Equipment Costs

145000

Jun-02

(-) Cash paid (down payment)

29000

Jun-02

Notes Payable amount

$116000

Jun-10

(-)Part of Notes payable repaid

22250

Jun-10

Note payable balance

$93750

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