Notes payable. Sentry Security Systems purchased $72,000 of office equipment on

Question

Notes payable. Sentry Security Systems purchased $72,000 of office equipment on April 1, 19X3, by signing a three-year, 12% note payable to Sharp, Inc. One-third of the principal, along with interest on the outstanding balance, is payable each April 1 until maturity. (The first payment is due in 19X4.) Fill in the following table to reflect Sentry's liabilities, assuming a March 31 year-end. Assuming that interest is properly recorded at the end of each year, present the proper journal entry to record the last payment on April 1, 19X6.

Explanation / Answer

a)

b) The journal entry is
Current Portion of Long Term Debt A/C ________ $24000
Interest Payable A/C_________________________ $2880
To Bank A/C_____________________________________ $26880

19X4 19X5 19X6 Current Liablities (Amt in $) (Amt in $) (Amt in $)      Current Portion of Long Term Debt 24000 24000 24000      Interest Payable 72000*.12 = 8640 48000*.12= 5760 24000*.12=2880 Long Term Liablities      Long Term Debt 72000-24000=48000 48000-24000=24000 24000-24000=0

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