A business issued a 120-day, 5% note for $60,000 to a creditor on account.
Journalize the entries to record (a) the issuance of the note and (b) the payment of the note at maturity, including interest. Assume a 360-day year. Refer to the Chart of Accounts for exact wording of account titles.
Ref. | Account | Debit | Credit |
a. | Accounts Payable | $60000 | |
Notes Payable | $60000 | ||
b. | Notes Payable | $60000 | |
Interest Expense ($60000 * 5% * 120/360) | $1000 | ||
Cash | $61000 | ||
A business issued a 120-day, 5% note for $60,000 to a creditor on account.
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