Alpha Company prepares quarterly adjusting entries. On August 1, 2017. Alpha Com

Question

Alpha Company prepares quarterly adjusting entries. On August 1, 2017. Alpha Company purchased equipment with a sticker price of $8,515 and signed a note due in 9 months for $10,000 that included interest in the valve of the note. Use this information to prepare the general journal entry for the November 1 equipment purchase. Prepare any additional general journal adjusting entries for Fiscal Years 2017 $ 2018. Additionally, prepare the general journal entry to record the payment of the note when due in 2018.

Explanation / Answer

Total Interest Payable on Note = 10000 - 8515 = $1,485

Monthly Interest = 1485 / 9 = $165 per month

Date Account Titles and Explanation Debit Credit 1 August 2017 Equipment         8,515 Deferred Interest Expense         1,485 Notes Payable      10,000 30 September 2017 Interest Expense (165*2)            330 Deferred Interest Expense            330 31 December 2017 Interest Expense (165*3)            495 Deferred Interest Expense            495 31 March 2018 Interest Expense (165*3)            495 Deferred Interest Expense            495 30 April 2018 Interest Expense (165*1)            165 Deferred Interest Expense            165 30 April 2018 Notes Payable      10,000 Cash      10,000

Related Questions

Navigate

• Browse (All)
• Browse A
• Subjects

---

---

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