Question

Apr. 8 Issued a $5.000. 60-day, six percent note payable in payment of an account with Bennett Company May 15 Borrowed $40.000 from Lincoln Bank, signing a 60-day note at nine percent. Jun. 7 Pald Bennett Company the principal and interest due on the April 8 note payable. Jul. 6 Purchased $12,000 of merchandise from Bolton Company: signed a 90-day note with ten percent interest. Jul. 14 Paid the May 15 note due Lincoln Bank. Oct. 2 Borrowed $30,000 from Lincoln Bank, signing a 120-day note at 12 percent. Oct. 4 Defaulted on the note payable to Bolton Company Required a. Record these transactions in general journal form. b. Record any adjusting entries for interest in general journal form. Logan Company has a December 31 year-end. Round answers to nearest dollar. Use 360 days for interest calculations. General Journal Description Debit Credit Date Apr.8 Issued a 60-day, 6 percent note payable in payment of an account payable. May 15 Borrowed from bank for 60 days at 9 percent. Jun.7 Interest Expense Paid note payable to Bennett Company. Jul.6 Purchased merchandise and issued a note payablewith interest at 10 percent for 90 days. Jul. 14 Interest Expense Paid note payable to Lincoln Bank, Oct 2 Borrowed from bank for 120 days at 12 percent. Oct.4 Interest Expense Defaulted on note payable. General Journal Description Debit Credit Date Dec.31 To record interest on the October 2 note payable to Lincoln Bank

Answer 1

ANSWER

Journal Entries
Date	Account Title and explanation	Debit	Credit
Apr, 08	Bennett Company	$                     5,000
	To 6% Note		$                       5,000
	(To record the issue of 6% note)
May, 15	Cash	$                  40,000
	To 9% Note		$                     40,000
	(To Record the amount borrowed against 9% note)
	6% Note	$                     5,000
June , 07	Interest on Note (5000 X 6% X 60/360 Days)	$                           50
	To Cash		$                       5,050
	(To Record the payment of note with interest)
July , 06	Merchandise	$                  12,000
	To 10% Note		$                     12,000
	(To record the note payable against purchase of merchandise)
July , 14	9% Note	$                  40,000
	Interest on Note (40,000 X 9% X 60/360)	$                        600
Oct, 02	Cash	$                  30,000
	To 12% Note		$                     30,000
	(To Record the borrowed money)
Oct, 04	"No Entry is required for Defaulted note payable)
	Interest Expenses	$                     1,200
Dec , 31	To Interest Payable		$                       1,200
	(To record the interest payable against issue of notes)
	Interest of Bolton Company = 12000 *10%*90/360 =	$                        300
	Interest of Lincoln Bank = 90 Days till Dec 31 = 30000 * 12% *90/360 =	$                        900
	Total Expenses	$                     1,200

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