Question

Entries for notes payable Instructions Chart of Accounts Journal Instructions A business issued a 45-day, 4% note for $260,000 to a creditor on account. Journalize the entries to record (a) the issuance of the note on January 1 and (b) the payment of the note at maturity, including interest. Assume a 300-day your Refer to the Chart of Accounts for exact wording of account titles.

Answer 1

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Journal A. - Date Debit Date January 1. Credit $ 260,000 Description Accounts Payable Notes Payable (Note issued to creditor) 260,000 B. $ Feburary 14. 200,000 Payable Expense 1,300 Notes Interest Cash (cash paid 261, 300 to discharge liability) calculation of Interest :- = Principal amount x 41 x 45 360 : $ 260,000 X 4.6 x 45 - $ 1,600. 360