Question

Bull City Industries is considering issuing a $100,000, 7% note to a creditor on account.

Assume a 360-day year. For a compound transaction, if an amount box does not require an entry, leave it blank.

Answer 1

Note: Leave comment in case other than journal entry something else is required. The question was not properly framed by you.

a) Journal entry : if the note is issued with a 45 day term

Date	accounts & explanation	debiit	credit
	Account payable	100000
	Notes payable		100000
	(To record issue notes payable)
	Notes payable	100000
	Interest expense (100000*7%*45/360)	875
	Cash		100875
	(To record payment of notes)

a) Journal entry : if the note is issued with a 90 day term

Date	accounts & explanation	debit	credit
	Account payable	100000
	Notes payable		100000
	(To record issue notes payable)
	Notes payable	100000
	Interest expense (100000*7%*90/360)	1750
	Cash		101750
	(To record payment of notes)