Homework Answers
1) Journal entries
| Date | account and explanation | Debit | Credit |
| Oct 1 | Equipment | 150000 | |
| Cash | 15000 | ||
| Notes payable | 135000 | ||
| (To record purchase equipment) | |||
| Dec 31 | Interest expense (135000*8%*3/12) | 2700 | |
| Interest payable | 2700 | ||
| (To record interest) | |||
| June 30 | Notes payable | 135000 | |
| Interest payable | 2700 | ||
| Interest expense | 5400 | ||
| Cash | 143100 | ||
| (To record payment) |
b) Current liabilities
| Current liabilities | |
| Interest payable | 2700 |
| Notes payable | 135000 |
| 137700 |
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