Question

Entries for notes payable Cosimo Enterprises issues a $260,000, 45-day, 5% note to Dixon Industries for merchandise inventory. Assume a 360-day year. For a compound transaction, if an amount box does not require an entry, leave it blank. a. Journalize Cosimo Enterprises' entries to record: 1. the issuance of the note. 2. the payment of the note at maturity. 2. b. Journalize Dixon Industries' entries to record: 1. the receipt of the note. 2. the receipt of the payment of the note at maturity. 1. 2.

Answer 1

Part 1 - Journal in books of Cosimo enterprise

Number	Accounts Title	Debit	Credit
1	Merchandise Inventroy	$260000
	Note Payable		$260000
	(Issue of note on purchase of inventory for business)
NOTE:	Interest Expenses	$1625
	Interest Payable		$1625
	(Interest Accrued of 45 days i.e. $260000*5%*45/360 = $1625)
2.	Note Payable	$260000
	Interest Payable	$1625
	Cash		$261625
	(Payment of Note to dixon industries)

Part 2 - Journal in books of Dixon Industries

Number	Accounts Title	Debit	Credit
1	Notes Receivable	$260000
	Sales		$260000
	(Received note on sale of goods)
NOTE	Interest Receivable	$1625
	Interest Revenue		$1625
	(Interest Revenue recognised)
2.	Cash	$261625
	Notes Receivable		$260000
	Interest Receivable		$1625
	(Receipt of payamet of note receivable)