Concept explainers
Problem 11-1B
Short-term notes payable transactions and entries PI
Warner Co. entered into the following transactions involving short-term liabilities in 2014 and 2015.
2014
Apr. 22 Purchased $5,000 of merchandise on credit from Fox Products, terms are 1 /10. n/30. Warner uses the perpetual inventory system.
May 23 Replaced the April 22 account payable to Fox Products with a 60-day. S4.600 note bearing 15% annual interest along with paying 5400 in cash.
July 15 Borrowed $12,000 cash from Spring Bank by signing a 120-day, 10% interest-bearing note with a face value of $12,000.
? Paid the amount due on the note to Fox Products at maturity.
? Paid the amount due on the note to Spring Bank at maturity.
Dec. 6 Borrowed $8,000 cash from City Bank by signing a 45-day, 9% interest-bearing note with a face value of $8,000.
31 Recorded an
2015
3 Paid the amount due on the note to City Bank at maturity.
Required
- Determine the maturity date for each of the three notes described.
- Determine the interest due at maturity for each of the three notes. (Assume a 360-day year.)
- Determine the interest expense to be recorded in the adjusting entry at the end of 2014.
- Determine the interest expense to be recorded in 2015.
- Prepare
journal entries for all the preceding transactions and events for years 2014 and 2015.
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FUND. OF ACCT. W/CONNECT
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