# Arvan Patel is a customer of Bank’s Hardware Store. For Mr. Patel’s latest purchase on January 1, 2018, Bank’s Hardware issues a note with a principal amount of \$480,000, 13% annual interest rate, and a 24-month maturity date on December 31, 2019. Record the journal entries for Bank’s Hardware Store for the following transactions. A. Note issuance B. Subsequent interest entry on December 31, 2018 C. Honored note entry at maturity on December 31, 2019.

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### Principles of Accounting Volume 1

19th Edition
OpenStax
Publisher: OpenStax College
ISBN: 9781947172685

#### Solutions

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Section
FindFindarrow_forward

### Principles of Accounting Volume 1

19th Edition
OpenStax
Publisher: OpenStax College
ISBN: 9781947172685
Chapter 9, Problem 14EA
Textbook Problem
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## Arvan Patel is a customer of Bank’s Hardware Store. For Mr. Patel’s latest purchase on January 1, 2018, Bank’s Hardware issues a note with a principal amount of \$480,000, 13% annual interest rate, and a 24-month maturity date on December 31, 2019. Record the journal entries for Bank’s Hardware Store for the following transactions.A. Note issuanceB. Subsequent interest entry on December 31, 2018C. Honored note entry at maturity on December 31, 2019.

To determine

Concept introduction:

Journal entry is the entry made in Journal books; it is also called books of Original entry. Both the effect of transaction is Simultaneously Recorded in this Book by Showing Debit and Credit on the book.

To prepare:

Journal Entry and Show Impact

### Explanation of Solution

Journal entries to record sales transaction are as Follows.

 JOURNAL ENTRIES DATE PARTICULAR LF DR(AMOUNT) \$ CR(AMOUNT) \$ 1-Jan-18 Accounts Receivables Account Dr 480000 To Sales Account 480000 (Being goods sold on credit of \$ 480000) 1-Jan-18 Note Receivables Dr 480000 To Accounts Receivables 480000 (Being note issue against account receivable)

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