Consider the following note payable transactions of Cabico Video Productions. 20

Question

Consider the following note payable transactions of Cabico Video Productions. 2015 Jun. 1 Purchased equipment costing $14,000 by issuing a one-year, 3% note payable. Dec. 31 Accrued interest on the note payable. 2016 Jun. 1 Paid the note payable plus interest at maturity. Journalize the transactions for the company. (Record debits first, then credits. Select the explanation on the last line of the journal entry table.) Accrued interest expense at year-end. Jun. 1, 2016: Paid the note payable plus interest at maturity. Date Accounts and Explanation Debit Credit 2016 Notes Payable Jun. 1 14,000 Interest Expense Interest Payable Cash Paid note and interest at maturity. 245

Explanation / Answer

Jun-01 Notes payable 14000 Interest expense 175 =14000*3%/12*5 Interest payable 245          Cash 14420

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