Question

Bennett Enterprises issues a $600,000, 45-day, 4% note to Spectrum Industries for merchandise inventory. Required: A. Journalize Bennett Enterprises' entries to record (refer to the company's Chart of Accounts for exact wording of account titles): 1. the issuance of the note. 2. the payment of the note at maturity. Assume a 360-day year. B. Journalize Spectrum Industries' entries to record (refer to the company's Chart of Accounts for exact wording of account titles): 1. the receipt of the note. 2. the receipt of the payment of the note at maturity. Assume a 360-day year.

Answer 1

Date	Description				Debit	Credit	Assets	liabilities	Equities
1-Jan	Accounts payable				600,000			-600,000
	Notes payable					600,000		600,000
15-Feb	interest expense				3000				-3000
	Notes payable				600,000			-600,000
	cash					603,000	-603,000
Required B
Date	Description				Debit	Credit	Assets	liabilities	Equities
1-Jan	Note receivable				600,000		600,000
	Account receivable					600,000	-600,000
15-Feb	Cash				603,000		603,000
	interest income					3,000			3,000
	note receivable					600,000	-600,000
(in case you are required to show increase or decrease in accounting equation , then positive value
means increase and negative values means decrease)