Question

Entries for notes payable Bennett Enterprises issues a $504,000, 30-day, 9%, note to Spectrum Industries for merchandise inventory. Assume a 360-day year. If required, round your answers to the nearest dollar. For a compound transaction, if an amount box does not require an entry, leave it blank. a. Journalize Bennett Enterprises' entriess to record: 1. the issuance of the note. 2. the payment of the note at maturity. 1. 2. b. Journalize Spectrum Industries' entries too record: 1. the receipt of the note. 2. the receipt of the payment of the note at maturity. 1. 2.

Answer 1

a) Bennett enterprises

1)

Merchandise Inventory account.............Debit $504,000

To Notes payable account....................Credit $504,000

2)

Notes payable account......................Debit $504,000

Interest expense account..................Debit $3,780 ($504,000 * 9% *30 /360)

To cash account...............................Credit $507,780

b) Spectrum Industries

1)

Notes receivable account.....................Debit $504,000

Merchandise Inventory account.............Credit $504,000

2) Cash account.........................Debit $507,780

To Interest revenue account.....Credit $3,780

To Notes receivable account........Credit $504,000