Question

Brief Exercise 10-2

Peralta Company borrows $79,400 on July 1 from the bank by signing a $79,400, 11%, one-year note payable.

(a)		Prepare the journal entry to record the proceeds of the note.
(b)		Prepare the journal entry to record accrued interest at December 31, assuming adjusting entries are made only at the end of the year.

(Credit account titles are automatically indented when amount is entered. Do not indent manually. Record journal entries in the order presented in the problem.)

Date	Account Titles and Explanation	Debit	Credit
July 1Dec. 31
July 1Dec. 31

Answer 1

Accounts Title and Explaination Jul-01 Cash Debit Credit Date $79,400.00 To Notes Payable $79,400.00 (To Record the Proceeds of Note) $ 4,367.00 Dec-31 Interest Expense To Interest Payable $ 4,367.00 79400 11% 6/12 (To Record the Accrued interest at Dec end)