Question

During the financial year ended 31 December, Lee Corporation engaged in the following transactions involving notes payable: 1 July Borrowed $20,000 from Weston Bank, signing a 90-day, 12 percent note payable. 16 Sept. Purchased office equipment from Moontime Equipment. The invoice amount was $30,000, and Moontime agreed to accept, as full payment, a 10 percent, three-month note for the invoice amount. 1 Oct. Paid Weston Bank the note plus accrued interest. 1 Dec. Borrowed $100,000 from Jean Will, a major corporate shareholder. The corporation issued Willa $100,000, 9 percent, 120-day note payable. 1 Dec. Purchased inventory in the amount of $10.000 from Listen Corporation. Listen accepted a 90- day, 12 percent note as a full settlement of the purchase. Lee Corporation uses a perpetual inventory system. 16 Dec. The $30,000 note payable to Moontime Equipment matured today. Lee paid the accrued interest on this note and issued a new 60-day, 16 percent note payable in the amount of $30,000 to replace the note that matured a. Prepare journal entries (in general journal form) to record the above transactions. Use a 360-day year in making the interest calculations. (Omit the "$" sign in your response.) General Journal Debit Credit Date 20XX 1 July (Click to select) (Click to select) 16 Sept. (Click to select) (Click to select) 1 Oct. (Click to select) (Click to select) (Click to select) 1 Dec. (Click to select) (Click to select) 1 Dec. (Click to select) (Click to select) 16 Dec. (Click to select) (Click to select) (Click to select) (Click to select)

Answer 1

	GENERAL JOURNAL
	Date	Account Title	Debit	Credit
	1,July	Cash	20,000
		Notes Payable		20,000
	16, Sep	Office Equipment	30,000
		Notes Payable		30,000
	1,Oct	Notes Payable	20,000
		Interest expense	600		(20000*12%*(90/360)
		Cash		20,600	(20000+600)
	1,Dec	Cash	100,000
		Notes Payable		100,000
	1,Dec	Inventory	10,000
		Notes Payable		10,000
	16,Dec	Notes Payable	30,000
		Interest expense	750		(30000*10%*(3/12)
		Cash		750
		Notes Payable		30,000
		Adjusting Entry
	31,Dec	Interest Expense	1,050		(100000*9%*(30/360)+10000*12%*(30/360)+30000*16%*(15/360)
		Interest Payable		1,050
		Interest on $100000 Note	$750	(100000*9%*(30/360)
		Interest on $10000 Note	$100	(10000*12%*(30/360)
		Interest on $30000 Note	$200	(30000*16%*(15/360)
		Total interest	$1,050