Nicole thinks that her business, Nicole\'s Getaway Spa (NGS), is doing really we

Question

Nicole thinks that her business, Nicole's Getaway Spa (NGS), is doing really well and she is planning a large expansion. With such a large expansion, Nicole will need to finance some of it using debt. She signed a one-year note payable with the bank for $ 63,000 with a 7.60 percent interest rate. The note was issued October 1, 2011, interest is payable semiannually, and the end of Nicole's accounting period is December 31.

Prepare the journal entries required from the issuance of the note until its maturity on September 30, 2012, assuming that no entries are made other than at the end of the accounting period, when interest is payable and when the note reaches its maturity. (Omit the "$" sign in your response.)

Prepare the journal entries required from the issuance of the note until its maturity on September 30, 2012, assuming that no entries are made other than at the end of the accounting period, when interest is payable and when the note reaches its maturity. (Omit the "$" sign in your response.)

Explanation / Answer

Note is for $65000 @9.6% PA So Int for 3 months 1 Oct to 31 Dec = 65000*9.6%*(3/12) = $1,560 Semiannnual Int = 65000*9.6%*6/12 = $3,120 October 1, 2011 Cash Dr 65000 Note Payable Cr 65000 Dec. 31, 2011 Int Exp Dr 1560 Acct Payable Cr 1560 March 31, 2012 Int Exp Dr 1560 Acct Paybale Dr 1560 Cash Cr 3120 Sept. 30, 2012 Int Exp 3120 Cash Cr 3120 Note Payabe Dr 65000 Cash Cr 65000

Related Questions

Navigate

• Browse (All)
• Browse N
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.