Question

Exercise 9-3 Accounting for note payable LO P1 Sylvestor Systems borrows $66,000 cash on May 15 by signing a 120-day, 8%, $66,000 note. 1. On what date does this note mature? 2-a. Prepare the entry to record issuance of the note. 2-b. First, complete the table below to calculate the interest expense at maturity. Use those calculated values to prepare your entry to record payment of the note at maturity.

Answer 1

Answer: 1) Note Matures on 12th September Credit 2) a) Journal Entry Date Account Tittle May 15 Cash Note Payable (To record Issuance of Note Payable) Debit $ 66,000 $ 66,000 Principal Rate Time Interest ($ 66000 * 8% *120/365) $ 66,000 8% 120 days $ 1,735.89 Journal Entry b) Date Account Tittle Sep 12 Note Payable InterestExpenses Cash (To record on maturity date) Debit Credit 66000 1736 67736 Alternative Answer: If Assumed Year has 360 Days Then Interest Expenses $ 1,760.00 b) Date Sep 12 Credit Account Tittle Note Payable InterestExpenses Cash (To record on maturity date) Debit $ 66,000 $ 1,760 $ 67,760