Question

Consider the following note payable transactions of Carlton Video Productions (Click the icon to view the transactions.) Requirements 1. Journalize the transactions for the company 2. Considering the given transactions only, what are Carlton Video Productions' total liabilities on December 31, 2019? More Info - X of the journal entry) Requirement 1. Journalize the transa Oct. 1. 2018: Purchased equipment each October 1 yments of $16,000 plus interest Date Account 2018 Oct 1 2018 Oct. 1 Purchased equipment costing 580,000 by issuing a five-year, 8% note payable. The note requires annual principal payments of $16,000 plus interest each October 1. Dec 31 Accrued interest on the note payable 2019 Oct 1 Paid the first installment on the note Dec. 31 Accrued interest on the note payable Print Done Choose from any list or enter any n

Answer 1

1.

Journal

Date	Account title	Debit	Credit
Oct. 1, 2018	Equipment	80,000
	Note payable		80,000
Dec. 31, 2018	Interest expense	1,600
	Interest payable		1,600
Oct. 1, 2019	Note payable	16,000
	Interest payable	1,600
	Interest expense	4,800
	Cash		22,400
Dec. 31, 2019	Interest expense	1,280
	Interest payable		1,280

Interest expense on Dec. 31, 2018 = Note payable x Interest rate x Time period

= 80,000 x 8% x 3/12

= $1,600

Interest expense on Oct. 1, 2019 = Note payable x Interest rate x Time period

= 80,000 x 8% x 9/12

= $4,800

Note payable outstanding on October 1, 2019 = 80,000 - 16,000

= $64,000

Interest expense on Oct. 1, 2019 = Note payable outstanding balance x Interest rate x Time period

= 64,000 x 8% x 3/12

= $1,280

2.

Total liabilities on December 31, 2019 = Note payable outstanding on December 31, 2019 + Interest payable on December 31, 2019

= 64,000 + 1,280

= $65,280

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