Question

Chapter 11

4).

On December 31, 2017, Jellison purchased $5,000 of merchandise inventory on a one-year, 11% note payable. Jellison uses a perpetual inventory system. Read the requirements. (Record debits first, then credits. Select the explanation on the last line of the journal entry table.) Requirement 1. Journalize the company's purchase of merchandise inventory on December 31, 2017. Date Accounts and Explanation Debit Credit i X Х Requirements 2017 Dec. 31 1. Journalize the company's purchase of merchandise inventory on December 31, 2017 2. Journalize the company's accrual of interest expense on June 30, 2018, its fiscal year-end. 3. Journalize the company's payment of the note plus interest on December 31, 2018. Print Done

Answer 1

Date	Accounts	Debit	Credit
Dec 31, 2017	Inventory	$ 5,000
	To Notes payable		$ 5,000
June 30, 2018	Interest Expense	$ 275
	To interest payable		$ 275
Dec 31, 2018	Notes payable	$ 5,000
	Interest payable	$ 550
	To cash		$ 5,550

SUMMARY:

First entry is debit inventory and credit note payable. On June 30 of 2018, 6 months interest to be recorded. One year interest is $ 550 and hence six month interest is $ 275. On payment date principal value of $ 5,000 and a one year interest of $ 550 to be paid.