Question

On

August 1August 1​,

20192019​,

The ResortThe Resort

at Mill​ Lake, Inc., purchased inventory costing

$ 50 comma 000$50,000

by signing

aa

66​%,

​six-month, short-term note payable. The company will pay the entire note​ (principal and​ interest) on the​ note's maturity date.Read the requirements

LOADING...

.

Requirement 1. Journalize the​ company's purchase of inventory. ​(Record debits​ first, then credits. Exclude explanations from journal​ entries.)

Journal Entry
Date		Accounts	Debit	Credit
2019
Aug	1	Cash	50000
		Note Payable, Short-term

Requirement 2. Make the adjusting entry for accrual of interest on the note payable on December​ 31,

20192019.

​(Record debits​ first, then credits. Exclude explanations from journal​ entries.)

Journal Entry
Date		Accounts	Debit	Credit
2019
Dec	31	Interest Expense
		Interest Payable

Requirement 3. At December​ 31,

20192019​,

what is reported on the balance sheet related to this note​ payable? ​(If a box is not used in the​ table, leave the box​ empty; do not select a label or enter a​ zero.)

Balance Sheet (partial) on December 31, 2019
Account	Amount
Current assets:
Interest payable
Note payable, short-term

Requirement 4. Record the payment of the note payable​ (principal and​ interest) on its maturity date. ​(Record debits​ first, then credits. Exclude explanations from journal​ entries.)

Journal Entry
Date		Accounts	Debit	Credit
2020
Feb	1	Note Payable, Short-term
		Interest Payable
		Interest Expense
		Cash

Answer 1

* Requirement 1 and Requirement 2

Journal Entry
Date	Accounts	Debit	Credit
2019
Aug-01	Inventory	$                50,000
	Note Payable, Short-term		$               50,000
Dec-31	Interest Expense [50000 x 6% x 5/12]	$                   1,250
	Interest Payable		$                 1,250

* Requirement 3

Balance Sheet (partial) on December 31, 2019
Account	Amount
Current Liabilities:
Interest payable	$                                        1,250
Note payable, short-term	$                                      50,000

* Requirement 4

Journal Entry
Date	Accounts	Debit	Credit
2020
Feb-01	Note Payable, Short-term	$                50,000
	Interest Payable [50000 x 6% x 5/12]	$                   1,250
	Interest Expense [50000 x 6% x 1/12]	$                      250
	Cash		$               51,500