Question

Consider the following note payable transactions of Cabal 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 Cabal Video Productions' total liabilities on December 31, 2019? Requirement 1. Journalize the transactions for the company. (Record debits first, then credits. Select explanations on the last line of the journal entry.) Oct. 1, 2018: Purchased equipment costing $80,000 by issuing a five-year, 8% note payable. The note requires annual principal payments of $ 16,000 plus interest each October 1. Date Accounts and Explanation Debit Credit 2018 i More Info Oct. 1 2018 Oct. 1 Purchased equipment costing $80,000 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 Print Done Done

Answer 1

Solution: Debit Credit Date Accounts and explanation 2018 | Oct 1. Equipment Note payable |(To record equipment purchased by issuing note) 80000 80000 Dec 31. Interest expense Interest payable 1180000*8%*3/12) (To record accrued interest) 2019 Oct 1. Interest expense=80000*0.08*9/12 Interest payable Note payable Cash (To record first instalment) 4800 1600 16000 22400 1280 1280 Dec 31. Interest expense Interest payable (80000-16000) * 8%*3/12 (To record accrued interest)