Question

1. Wilburn purchased merchandise from Roaders Co. on October 16 of the current year, and issued a 90days note payable to Roaders Co. for $6,200, at 6%. a. What entry should Roaders Co. make on December 31, the end of the fiscal year? Date Accounts Dr. b. What entry will Roaders Co, record in its accounts when the note is eventually paid.? Date Accounts

Answer 1

Journal entries are as follows:-

Debit Credit Date Account Titles Dec-31 Interest expense Interest payable 79.57 $ 79.57 Jan-13 Interest expense Interest payable Notes payable Cash $ $ $ 13.43 79.57 6,200.00 $ 6,293.00

Interest expense on Dec 31 = $6,200 * 6% * 77 days /360 = $79.57
Days from October 16 to Dec 31 = 77 days

Interest expense on Jan 13 = $6200 * 6% * 13 days / 360 = $13.43