Kubek Inc., whose fiscal year ended June 30, 2014, completed the following. tran

Question

Kubek Inc., whose fiscal year ended June 30, 2014, completed the following. transactions involving notes payable: FIVE POINTS May 21 Obtained a 60-day cxtcnsion on an $36,000tade account payable owed to a supplier by signing a 60-day $36,000 notc. Interest is in addition to the face value, at the rate of 14 percent. June 30 Made the end-of-year adjusting entry to accrue intercst expense (Round to July 20 Paid of the note plus interst due the supplier Round to the nearest cnt.) Note: The first journal entry does not include an entry to cash. Read May 21 the nearcst cent.) instruction carefully Prepare journal entries for the notes payable transactions DATES AND EXPLANATIONS REQUIRED! NO JOURNAL REFERENCE NECESSARY.

Explanation / Answer

Ans. Date Accounts and Titles Dr.($) Cr.($) May. 21 Accounts Payable 36000     To 14% Note Payable 36000 (Being cash received from Jasmine Co.) June. 30 Interest Expense 138     To Interest payable 138 (Being adjust Interest payable of the year for 10 days (i.e. 36,000x14%x10/365)) June. 20 Interest Expense 276     To Interest payable 276 (Being Interest payable for 20 days from 1 july to 20 July i.e. (36,000x14%x30/365)) June. 20 14% Note payable 36000 Interest payable 414     To Cash 36414 (Being payment made for 14% Notes)

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