Answered: Recording Entries for Interest-Bearing…

Financial Accounting

14th Edition

ISBN:9781305088436

Author:Carl Warren, Jim Reeve, Jonathan Duchac

Publisher:Carl Warren, Jim Reeve, Jonathan Duchac

Chapter14: Long-term Liabilities: Bonds And Notes

Section: Chapter Questions

Problem 11E

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Recording Entries for Interest-Bearing Note Payable

Fern Company purchased goods on January 1, 2020, and issued a two-year, $7,500 note with a 5% stated rate. The fair value of the goods is $7,098. The note requires annual interest payments on December 31. The market rate of interest appropriate for this note is 8%. Provide journal entries to be made at each of the following dates.

a. January 1, 2020, for issuance of the note.

b. December 31, 2020, for the interest payment.

Note: List multiple debits or credits (when applicable) in alphabetical order.
Note: Round your answers to the nearest whole dollar.

	Date	Account Name	Dr.	Cr.
a.	Jan. 1, 2020	Answer	Answer	Answer
		Answer	Answer	Answer
		Answer	Answer	Answer
b.	Dec. 31, 2020	Answer	Answer	Answer
		Answer	Answer	Answer
		Answer	Answer	Answer

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