Question

A company issues two separate short term notes payable:

- October 1st 2017, they issued zero interest note payable due on April 1st 2019 in the amount of 106,000 as a payment for 100,000.

- November 1st 2017, they issue a 200,000 note at 10% interest due on April 1st 2019

prepare journal entries and adjusting entries from October to April

what balances of these loans would be on the company's 2018 balance sheets and how would they be classified.

Answer 1

Journals Entries

Date	Description	Debit	Credit	Notes
1st Oct-17	Cash	100,000
	0 interest Note Payable		100,000
1st Nov-17	Cash	200,000
	10% interest Note Payable		200,000
31st Dec-17	Finance Cost	4,333
	0 interest Note Payable		1,000	$6,000/18 months X 3 months
	10% interest Note Payable		3,333	$200,000 X 10%/12 months X 2 months
31st Dec-18	Finance Cost	24,000
	0 interest Note Payable		4,000	$6,000/18 months X 12 months
	10% interest Note Payable		20,000	$200,000 X 10%
1s Apr-19	Finance Cost	6,000
	0 interest Note Payable		1,000	$6,000/18 months X 3 months
	10% interest Note Payable		5,000	$200,000 X 10%/12 months X 3 months
1s Apr-19	0 interest Note Payable	106,000
	10% interest Note Payable	228,333
	Cash		334,333

Balances as on Dec-18	(Principal plus accrued interest in 2017 and 2018)
0 interest Note Payable	105,000
10% interest Note Payable	223,333
Total	328,333