GJ-4 Question 4 (8 points) Alpha Company prepares quarterly adjusting entries. O

Question

GJ-4 Question 4 (8 points) Alpha Company prepares quarterly adjusting entries. On August 1, 2017, Alpha Company purchased equipment with a sticker price of $8,515 and signed a note due in 9 months for $10,000 that included interest in the value of the note. Use this information to prepare the general journal entry for the August 1 equipment purchase. Prepare any additional general journal adjusting entries for Fiscal Years 2017 & 2018. Additionally, prepare the general journal entry to record the payment of the note when due in 2018 General Journal Debit Credit Date Accounts 8/31/17

Explanation / Answer

Journal Entries :

Date Accounts Titles and explanation Debit $ Credit $ Aug 1 17 Equipment 8515 Discount on Note Payable 1485 Note Payable 10000 (being the noe issued at dicount) Dec 31 17 Interest expense 825 Discount on Note Payable 825 (being the interest expense and amortisation of the discount made at year end) Apr 31 18 Note Payable 10000 Interest Expense 660 Discount on Note Payable 660 Cash 10000 (being the note paid off on maturity and discount on note issue duely amortised)

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