Question

Proco had an account payable of $6,200 due to Shirmoo Inc., one of its suppliers. The amount was due to be paid on January 31. Proco did not have enough cash on hand then to pay the amount due, so Proco's treasurer called Shirmoo's treasurer and agreed to sign a note payable for the amount due. The note was dated February 1, had an interest rate of 6% per annum, and was payable with Interest on May 31 Required: a. Use the horizontal model to show the effects (+ for addition and for subtraction) of each of these transactions and adjustments for Proco on the following: a. February 1, to show that the account payable had been changed to a note payable. b. March 31, to accrue interest expense for February and March C. May 31, to record payment of the note and all of the interest due to Shirmoo. b. Prepare the journal entries to show each of these transactions and adjustments, Complete this question by entering your answers in the tabs below. Required A Required B Use the horizontal model to show the effects (+ for addition and - for subtraction) of each of these transactions and adjustments for Proco on the following: a. February 1, to show that the account payable had been changed to a note payable b. March 31, to accrue interest expense for February and March C. May 31, to record payment of the note and all of the interest due to Shirmoo. Balance Sheet Category Income Stateme Transaction Adjustment Assets Liabilities Stockholders' Equity Net Income Effect Revenues

Answer 1

Please hit LIKE button if this helped. Part a Event Assets Liabilities Stockholder's Equity Net Income Revenue Expense a b $6,200*6%*2/12 $ -6,200 $ 6,200 $ 62 $ $ -6,324 $ -6,200 $ -62 S -62 $ -62 $ 62 с C -62 $ -62 $ 62 Part b Date Accoun Debit Credit Jan 31 $ 6,200 Accounts Payable Note Payable (To convert accounts payable to Note) $ 6,200 Mar 31 $ 62 Interest Expense Interest Payable (To record interest for 2 months( $6,200*6%*2/12) $ 62 May 31 Note Payable Interest Expense Interest Payable Cash (To record payment of note and interest) $ 6,200 $ 62 $ 62 $ 6,324