Question

Brief Exercise 13-3 Ayayai Corporation borrowed $56,000 on November 1, 2017, by signing a $57,320, 3-month, zero-interest-bearing note. Prepare Ayayai’s November 1, 2017, entry; the December 31, 2017, annual adjusting entry; and the February 1, 2018, entry. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Brief Exercise 13-3 Ayayai Corporation borrowed $56,000 on November 1, 2017, by signing a $57,320, 3-month, zero-interest-bearing note. Prepare Ayayai's November 1, 2017, entry; the December 31, 2017, annual adjusting entry; and the February 1, 2018, entry. (If no entry is required, select "No Entry" for the account titles and enter o for the amounts. Credit account titles are automatically Indented when amount is entered. Do not Indent manually.) Account Titles and Explanation Debit Credit Date 11/1/17 (To record interest) (То рay поte) Click if you would like to Show Work for this question: Open Show Work

Answer 1

Credit $ $ Debit 56,000 1,320 $ 57,320 $ 880 $ 880 Date Account Title and Explanation 11/1/2017 Cash Discount on Notes Payable Notes Payable 12/31/2017 Interest Expense Discount on Notes Payable 2/1/2018 Interest Expense Discount on Notes Payable (To record interest) Notes Payable Cash (To pay note) $ 440 $ 440 $ 57,320 $ 57,320 Working Notes: 12/31/2017 Interest Expenses = $1,320*2/3 = $880 2/1/2018 Interest Expenses = $1,320*1/3 = $440