Question

GL901 - Based on Problem 9-1A LO C2, P1

The January 1, Year 1 trial balance for the Carter Company is found on the trial balance tab. The beginning balances are assumed.

Gonzalez Co. entered into the following transactions involving short-term liabilities. (Use 360 days a year.)

Year 1
Apr.		20		Purchased $49,750 of merchandise on credit from Nguyen, terms n/30.
May		19		Replaced the April 20 account payable to Nguyen with a 90-day, 8%, $38,000 note payable along with paying $11,750 in cash.
July		8		Borrowed $102,000 cash from NMR Bank by signing a 120-day, 10%, $102,000 note payable.
Aug.		17		Paid the amount due on the note to Nguyen at the maturity date.
Nov.		5		Paid the amount due on the note to NMR Bank at the maturity date.
Nov.		28		Borrowed $60,000 cash from Chicago Bank by signing a 60-day, 6%, $60,000 note payable.
Dec.		31		Recorded an adjusting entry for accrued interest on the note to Chicago Bank.
Year 2
Jan.		27		Paid the amount due on the note to Chicago Bank at the maturity date.

www.uy....wwwwwwwwwwwIVI..vwwww.................... The January 1, Year 1 trial balance for the Carter Company is found on the trial balance tab. The beginning balances are assumed. Gonzalez Co. entered into the following transactions involving short-term liabilities. (Use 360 days a year.) Year Apr. May July Aug. 20 Purchased $49,750 of merchandise on credit from Nguyen, terms n/30. 19 Replaced the April 20 account payable to Nguyen with a 90-day, 8%, $38,000 note payable along with paying $11,750 in cash. 8 Borrowed $102,000 cash from NMR Bank by signing a 120-day, 10%, $102,000 note payable. 17 Paid the amount due on the note to Nguyen at the maturity date. 5 Paid the amount due on the note to NMR Bank at the maturity date. 28 Borrowed $60,000 cash from Chicago Bank by signing a 60-day, 6%, $60,000 note payable. 31 Recorded an adjusting entry for accrued interest on the note to Chicago Bank. Nov. Nov. Dec. Year : 2 Jan. 27 Paid the amount due on the note to Chicago Bank at the maturity date. Answer is not complete. Requirement General Journal General Ledger Trial Balance Schedule of Payables Calculation of Interest Year 2 payment Prepare the journal entries related to notes and accounts payable. Hint: Use the "Calculation of Interest" tab to ensure the accuracy of your entries. No Credit Date Apr 20 Account Title Merchandise inventory Accounts payable - Nguyen Debit 49,750 49,750 May 19 49,750 Accounts payable - Nguyen Notes payable - Nguyen Cash 38,000 11,750 Jul 08 102,000 Cash Notes payable - NMR Bank 102,000 Aug 17 Notes payable - Nguyen Interest expense Cash 38,000 760 38,760 Nov 05 Notes payable - NMR Bank Interest expense Cash 102,000 3,400 105,400 Nov 28 60,000 Cash Notes payable - Chicago 60,000 Dec 31 Interest expense Interest payable - 330 330

Answer 1

Upto the Stage 4-Trial Balance all are correct.
Stage 5: Schedule of Payables:
Gonzalez Co.
Notes Payable:
Notes payable - chicago	60000
Total Notes payable	60000
Interest Payable:
Interest Payable - Chicago	330
Total Interest Payable	330
Stage 6: Calculation of Interest:
Principal =	60000
Period =	60
Rate of interest =	6%
Number of days in a year =	360
Total interest for 60 days =	60000*6%*60/360 =600
Interest payable on Dec 31,2018 =	60000*6%*33/360 =330
Interest payable in Year 2 =	600-330=270
Stage 7: Year 2 payment entry:
Date	Acc. Titles	Debit $	Credit $
1/27/Year 2	Notes payable-Chicago	60000
	Interest payable	330
	Interest expense	270
	Cash		60600
	(being Chicago note paid off along with interest)

Answer 2

Year 2 Payment: