Problem 10-2A (Part Level Submission) Recorded accrued interest for the Prime Ba
ID: 2567885 • Letter: P
Question
Problem 10-2A (Part Level Submission)
Recorded accrued interest for the Prime Bank note and the vehicle note.
Prepare journal entries for the transactions noted above. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Record journal entries in the order presented in the problem.)
There are only a few I need help with. OCT 31 how to calc Int Exp and Int Pay., Dec 1 Int Pay, and Dec. 31 Int Exp and Int Pay. Could you show how you got the answers? Thank you!!
Problem 10-2A (Part Level Submission)
Ayayai Corporation sells rock-climbing products and also operates an indoor climbing facility for climbing enthusiasts. During the last part of 2017, Ayayai had the following transactions related to notes payable.Sept. 1 Issued a $13,200 note to Pippen to purchase inventory. The 3-month note payable bears interest of 6% and is due December 1. (Ayayai uses a perpetual inventory system.) Sept. 30 Recorded accrued interest for the Pippen note. Oct. 1 Issued a $18,000, 8%, 4-month note to Prime Bank to finance the purchase of a new climbing wall for advanced climbers. The note is due February 1. Oct. 31 Recorded accrued interest for the Pippen note and the Prime Bank note. Nov. 1 Issued a $24,000 note and paid $7,500 cash to purchase a vehicle to transport clients to nearby climbing sites as part of a new series of climbing classes. This note bears interest of 6% and matures in 12 months. Nov. 30 Recorded accrued interest for the Pippen note, the Prime Bank note, and the vehicle note. Dec. 1 Paid principal and interest on the Pippen note. Dec. 31
Recorded accrued interest for the Prime Bank note and the vehicle note.
Prepare journal entries for the transactions noted above. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Record journal entries in the order presented in the problem.)
There are only a few I need help with. OCT 31 how to calc Int Exp and Int Pay., Dec 1 Int Pay, and Dec. 31 Int Exp and Int Pay. Could you show how you got the answers? Thank you!!
Explanation / Answer
Answer - Journal Entries
Sousa Realty General Journal for the month of September Date Particulars Debit ($) Credit ($) 2017 Sep.1 Inventory or Purchases 13,200 Notes Payable 13,200 (Being Note Payable issued to Pippen to purchase inventory) Sep.30 Interest Expense (13,200 x 6% x 1/12) 66 Interest Payable 66 (Recorded accrued interest for the Pippen note) Oct.1 Climbing Wall 18,000 Notes Payable 18,000 (Being Note Payable issued to Prime Bank to purchase new Climbing wall) Oct.31 Interest Expense (18,000 x 8% x 1/12) + 66 186 Interest Payable 186 (Recorded accrued interest for the Pippen note and the Prime Bank note) Nov.1 Vehicles 31,500 Notes Payable 24,000 Cash at Bank 7,500 (Being Vehicles purchased issuing notes payable and cash) Nov.30 Interest Expense (24,000 x 6% x 1/12) +120 + 66 306 Interest Payable 306 (Recorded accrued interest for the Pippen note, the Prime Bank note, and the vehicle note) Dec.1 Notes Payable 13,200 Interest Payable (66*3months) 198 Cash at Bank 13,398 (Paid principal and interest on the Pippen note) Dec.31 Interest Expense (120+120) 240 Interest Payable 240 (Recorded accrued interest for the Prime Bank note and the vehicle note)Related Questions
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