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Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094

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Section
BuyFindarrow_forward

Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094
Textbook Problem

Entries for notes payable

A business issued a 45-day, 6% note for $210,000 to a creditor on account. Journalize the entries to record (a) the issuance of the note and (b) the payment of the note at maturity, including interest.

To determine

Note Payable: Note payable is an obligation of the business to pay to its creditors, in future for the benefits received that carry some interest.

To journalize: Issuance of the note and payment on maturity.

Explanation

a.

Journalize the entry to record the issuance of the note.

Date Account Title and Explanation

Post

Ref.

Debit

($)

Credit

($)

Accounts Payable 210,000
Note Payable 210,000
(To record the issuance of notes on account)

Table (1)

  • Accounts payable is a liability and it is decreased. So debit it by $210,000.
  • Note Payable is a liability and it is increased. So, credit it by $210,000.

b.

Journalize the entry to record the payment of note at maturity.

Date Account Title and Explanation

Post

Ref.

Debit

($)

Credit

($)

Note Payable 210,000
Interest Expense (1) 1,575
...

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