On November 1, Casey's Snowboards signed a $12,000, 90-day, 5% note payable to cover a past due account payable.
On November 1, Casey's Snowboards signed a $12,000, 90-day, 5% note payable to cover a past due account payable.
a. What amount of interest expense on this note should Casey's Snowboards report on year-end December 31?
b. Prepare Casey's journal entry to record the issuance of the note payable.
c. Prepare Casey's adjusting journal entry at the end of the year
d. Prepare Casey's journal entry to record the payment of the note on February I of the following year.
Homework Answers
| DR | CR | ||
| a | Cash | 12000 | |
| Note payable | 12000 | ||
| (issue of Note payable) | |||
| b | Interest expense | 98.63 | |
| Interest Payable | 98.63 | ||
| (12000*60/365*5%) | |||
| (adjustment entry for two month interest) | |||
| c | Note payable | 12000 | |
| Interest Payable | 98.63 | ||
| Interest expense (12000*30/365*5%) | 49.32 | ||
| Cash | 12147.94 |
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