Question

On 2/1/20, the company purchased a large fishing boat for $32,000 of which had a down payment of $4,500 and the rest of borrowed from First Hawaiian Bank. The Note Payable’s principle has a 5% annual interest rate due every 8-months while the principle is due at maturity date in 5 years. The item is depreciated using the straight-line method and has a useful life of 10 years.

1. Prepare Journal Entries in the General Journal

2. Post the journal entries to the General Ledger

3. Prepare Unadjusted Trial Balance as of 12/31/20.

Answer 1

Jounal 08/1/20 entries . Baat Dr $32000 o Note Payable & 4500 31st Cash $27500 131/08/60 Interest, Dr $917. Interest Payable $917 31/12/20 Interest Dr $458 Interest payable $458 31/08/20 Interest payable for $917 Cash $917 31/12/20 Deprecahon Dr $3200 $3200 - (2) Post to Ledger 02/1/20 Cash $4500 31/12/20 Depaecation. 3200 Note payable $27500 $32000 31/12/20 Balance $28800 Boat Boat Note payable 10211220 Poat $27500 - 131/12/20 Balance $27500.

31840 Cash Interest Payable $917 31/8/20 Interest 31/12/20 Interest 1 31/12/20 Balance $42 $458 11375 $458 Unadjusted Trial balance - Accounts Boat Cash Note Payable Interest payable as on 31/12/20. Amt (Dr) Amount Co $98800 $27500 $458