ANSWER
Journal Entries | |||
Date | Account Title and explanation | Debit | Credit |
Apr, 08 | Bennett Company | $ 5,000 | |
To 6% Note | $ 5,000 | ||
(To record the issue of 6% note) | |||
May, 15 | Cash | $ 40,000 | |
To 9% Note | $ 40,000 | ||
(To Record the amount borrowed against 9% note) | |||
6% Note | $ 5,000 | ||
June , 07 | Interest on Note (5000 X 6% X 60/360 Days) | $ 50 | |
To Cash | $ 5,050 | ||
(To Record the payment of note with interest) | |||
July , 06 | Merchandise | $ 12,000 | |
To 10% Note | $ 12,000 | ||
(To record the note payable against purchase of merchandise) | |||
July , 14 | 9% Note | $ 40,000 | |
Interest on Note (40,000 X 9% X 60/360) | $ 600 | ||
Oct, 02 | Cash | $ 30,000 | |
To 12% Note | $ 30,000 | ||
(To Record the borrowed money) | |||
Oct, 04 | "No Entry is required for Defaulted note payable) | ||
Interest Expenses | $ 1,200 | ||
Dec , 31 | To Interest Payable | $ 1,200 | |
(To record the interest payable against issue of notes) | |||
Interest of Bolton Company = 12000 *10%*90/360 = | $ 300 | ||
Interest of Lincoln Bank = 90 Days till Dec 31 = 30000 * 12% *90/360 = | $ 900 | ||
Total Expenses | $ 1,200 | ||
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