Problem 10-2A Bramble Corporation sells rock-climbing products and also operates

Question

Problem 10-2A Bramble Corporation sells rock-climbing products and also operates an indoor climbing facility for climbing enthusiasts. During the last part of 2017, Bramble had the following transactions related to notes payable Issued a $15,600 note to Pippen to purchase inventory. The 3-month note payable bears interest of 9% and is due December 1, (Bramble Sept. 1 Sept. 30 Oct. uses a perpetual inventory system.) Recorded accrued interest for the Pippen note Issued a $21,600, 8%, 4-month note to Prime Bank to finance the purchase of a new climbing wall for advanced climbers. The note is due 1 February 1 Oct. 31 Nov. 1 Nov 30 Dec. Recorded accrued interest for the Pippen note and the Prime Bank note Issued a $27,600 note and paid $8,500 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 8% and matures in 12 months Recorded accrued interest for the Pippen note, the Prime Bank note, and the vehicle note Paid principal and interest on the Pippen note Recorded accrued interest for the Prime Bank note and the vehicle note Dec. 31 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.) Date Account Titles and Explanation Debit Credit

Explanation / Answer

Date Account titles & Explanations Debit Credit 1-Sep Merchandise inventory 15,600 9% notes payable 15,600 30-Sep interest expense 117 interest payable 117 (15600*9%*1/12) 1-Oct Climbing wall 21,600 8% notes payable 21,600 31-Oct interest expense 261 interest payable 261 (117 +21600*8%*1/12) 1-Nov Truck 36,100 cash 8,500 8% notes payable 27,600 30-Nov interest expense 445 interest payable 445 (117+144+184) 1-Dec notes payable 15,600 interest payable 351 cash 15,951 31-Dec interest expense 328 interest payable 328 notes payable 1-Dec 15600 1-Sep 15,600 1-Oct 21,600 1-Nov 27,600 bal 49,200 interest expense 30-Sep 117 31-Oct 261 30-Nov 445 31-Dec 328 bal 1151 interest payable 1-Dec 351 30-Sep 117 31-Oct 261 30-Nov 445 31-Dec 328 bal 800 Balance sheet (partial) Current liabilities Notes payable 49,200 interest payable 800 interest expense incurred during the year 1,151

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