Prepare
Explanation of Solution
Note Payable:
Note payable is an obligation of the business to pay to its creditors in future for the benefits received that carries some interest.
Prepare journal entry to record the following transactions of MR Shop are shown below:
Date | Account titles and Explanation | Debit | Credit |
April 1 | Cash | $4,000 | |
Notes payable | $4,000 | ||
(To record note issued for bank loan) | |||
April 5 | Purchases | $3,000 | |
Notes payable | $3,000 | ||
(To record note issued for inventory purchase) | |||
April 10 | Accounts payable – A.A | $2,000 | |
Cash | $400 | ||
Notes payable | $1,600 | ||
(To record partial payment made and issued note to settle account) | |||
May 10 | Notes payable (old note) | $1,600 | |
Interest expense (1) | $8 | ||
Cash | $408 | ||
Notes payable (new note) | $1,200 | ||
(To record paid interest and part of partial of principal on old note and issued new note) | |||
May 20 | Cash (3) | $4,440 | |
Discount on bonds payable (2) | $600 | ||
Notes payable | $4,500 | ||
(To record issued note for bank loan) | |||
June 4 | Notes payable (old note) | $3,000 | |
Interest expense (4) | $35 | ||
Cash | $535 | ||
Notes payable (new note) | $2,500 | ||
(To record paid interest and part of partial of principal on old note and issued new note) | |||
June 9 | Notes payable | $1,200 | |
Interest expense (5) | $7 | ||
Cash | $1,207 | ||
(To record paid note with interest at maturity) | |||
June 30 | Notes payable | $4,000 | |
Interest expense (6) | $80 | ||
Cash | $4,080 | ||
(To record paid note with interest at maturity) | |||
July 4 | Notes payable | $2,500 | |
Interest expense (7) | $14.58 | ||
Cash | $2,514.58 | ||
(To record paid note with interest at maturity) | |||
July 19 | Notes payable | $4,500 | |
Interest expense (8) | $60 | ||
Discount on notes payable | $60 | ||
Cash | $4,500 | ||
(To record paid note at maturity) |
Table (1)
Working notes:
(1)Calculate interest expenses.
(2)Calculate discount on notes payable.
(3)Calculate cash proceeds.
(4)Calculate interest expense.
(5)Calculate interest expense.
(6)Calculate interest expense.
(7)Calculate interest expense.
(8)Calculate interest expense.
Want to see more full solutions like this?
Chapter 17 Solutions
CENGAGENOWV2 FOR HEINTZ/PARRY'S COLLEGE
- NOTES RECEIVABLE ENTRIES M. L. DiMaurizio had the following notes receivable transactions: REQUIRED Record the transactions in a general journal.arrow_forwardNOTES RECEIVABLE DISCOUNTING Madison Graphics had the following notes receivable transactions: REQUIRED Record the transactions in a general journal.arrow_forwardNOTES RECEIVABLE DISCOUNTING Marienau Suppliers had the following transactions: REQUIRED Record the transactions in a general journal.arrow_forward
- NOTES PAYABLE ENTRIES Milo Radio Shop had the following notes payable transactions: REQUIRED Record the transactions in a general journal.arrow_forwardA journal entry that requires a debit to Accounts Receivable and a credit to Sales goes in which special journal?arrow_forwardAll sales, for cash or on credit, can be recorded in the general journal.arrow_forward
- Notes receivable entries The following data relate to notes receivable and interest for CGH Cable Co., a cable manufacturer and supplier. (All notes are dated as of the day they are received.) Instructions Journalize the entries to record the transactions.arrow_forwardYou just posted a credit to Accounts Receivable. Which special journal did it come from? A. sales journal B. cash receipts journal C. purchases journal D. cash disbursements journal E. general journalarrow_forwardYou just posted a debit to ABC Co. in the accounts receivable subsidiary ledger. Which special journal did it come from? A. sales journal B. cash receipts journal C. purchases journal D. cash disbursements journal E. general journalarrow_forward
- A customer issued a note for an overdue account. Which of the following procedures is correct? A. The note is credited in the general journal by a debit to accounts receivable B. The amount will be posted to the credit side of the customer's card C. The amount will be posted to the debit side of the customer's card D. This will be posted to the accounts receivable general ledger on the debit side.arrow_forwardEach time an entry is recorded in the purchases journal, the credit would be entered in the accounts payable column accounts receivable column purchases column supplies columnarrow_forwardFiona sporty uses to purchases journal a cash payment journal ,a sale journal and a general journal indicate which journal the following transactions are most likely to be recorded Purchased inventories on credit Sales of inventory on credit Received payment of customer accounts Payment of monthly rent by cheque End of period closing enteriesarrow_forward
- College Accounting, Chapters 1-27AccountingISBN:9781337794756Author:HEINTZ, James A.Publisher:Cengage Learning,Financial AccountingAccountingISBN:9781337272124Author:Carl Warren, James M. Reeve, Jonathan DuchacPublisher:Cengage LearningFinancial And Managerial AccountingAccountingISBN:9781337902663Author:WARREN, Carl S.Publisher:Cengage Learning,
- Principles of Accounting Volume 1AccountingISBN:9781947172685Author:OpenStaxPublisher:OpenStax CollegeCollege Accounting (Book Only): A Career ApproachAccountingISBN:9781337280570Author:Scott, Cathy J.Publisher:South-Western College Pub