Question

Copperfield and Company issued a 90-day, 5.00% note for $190,000 to a creditor on account. The previous clerk entered the following journal entries to record the note on July 10, and the payment of the note at maturity. PAGE 25 JOURNAL ACCOUNTING EQUATION DESCRIPTION POST. REF. DEBIT CREDIT ASSETS LIABILITIES EQUITY DATE Jul. 10 Accounts Payable 190,000.00 Notes Payable 190,000.00 Notes Payable 199,500.00 Accounts Payable 190,000.00 Interest Expense 9,500.00 You notice that the journal entry for recording the note on July 10 is correct, but the entry for the payment of the note at maturity (including interest) did not have a date and was not correct. Journalize the payment of the note at maturity as it should have been journalized. Don't forget to include the date. Assume a 360-day year.

Answer 1

July 10	Accounts payable Dr	190000
	To (Short Term) Notes Payable a/c		190000
October 8 (or October 10)	(Short term) Notes payable a/c Dr	190000
	Interest expenses a/c (190000*5%*90/360) Dr	2375
	To Cash a/c		192375
	(being payment of note payable made on maturity)

90-day period if assumed calendar months- ends on October 8th, if assumed 360-day year (ie 30 days per month) ends on October 10th