Question

On February 1, 2019, Jurgen Company purchased inventory costing $92,000 by signing a 6 %, nine-month, short-term note payable. Jurgen will pay the entire note (principal and interest) on the note's maturity date. Journalize the company's (a) purchase of inventory; and (b) accrual of interest on the note payable on August 31, 2019. (Record debits first, then credits. Exclude explanations from any journal entries.) (a) Journalize the company's purchase of inventory. Journal Entry Accounts Date Debit Credit 2019 Inventory 92,000 Feb 1 Note Payable, Short-Term 92,000 Choose from any list or enter any number in the input fields and then click Check Answer.

Answer 1

1. The entry to record purchase of inventory

Feb. 1 Inventory A/C………………………………. Dr. $92,000

                 Note Payable, Short-term A/C……………………. Cr. $92,000

b. The entry to record accrual interest on note as on Aug 31, 2019

Aug 31 Interest expense A/C………………………. Dr. $3,220

                       Interest Payable A/C…………………………. Cr. $3,220

Note: Accrued interest for 7 months (Feb. 1 to Aug. 31)

Interest = Note * Rate * due months

            = $92,000 * 6%* 7/12

            = $3,220

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