Question

Adjusting Entries for Interest At December 31, 2011, Portland Corporation had two notes payable outstanding (notes 1 and 2). At December 31, 2012, Portland also had two notes payable outstanding (notes 3 and 4). These notes are described below. Principal Amount Interest Rate Number of Days Date of note December 31, 2011 Note 1 November 25, 2011 Note 2 December 16, 2011 December 31, 2012 Note 3 December 11, 2012 Note 4 December 07, 2012 $29,000 18,800 896 996 17,400 20,000 996 1096 Required a. Prepare the adjusting entries for interest at December 31, 2011. b. Assume that the adjusting entries were made at December 31, 2011, and that no adjusting entries were made during 2012. Prepare the 2012 journal entries to record payment of the notes that were outstanding at December 31, 2011. c. Prepare the adjusting entries for interest at December 31, 2012. Round answers to nearest dollar. Use 360 days for interest calculations when applicable. General Journal Date Description Debit Credit Dec.31 To record interest on note 1. Dec.31 To accrue interest on note 2. Feb. 14 Notes Payable Interest Expense To record payment of Note 2. Feb.23 Notes Payable Interest Expense To record payment of Note 1. Dec.31 To record interest on Note 3. Dec.31 To record interest on Note 4.