Soto Corporation has an Accounts Payable of $28,000 to a supplier. The company i

Question

Soto Corporation has an Accounts Payable of $28,000 to a supplier. The company is short of cash and on July 1, the supplier agrees to accept a 30 day 12% note. What journal entry should Soto Corporation make on July 1? Dr Accounts Payable 28000 Cr Notes Payable 28000 What effect does this entry have on the accounting equation? AssetsLiabilities (Increase :-(Increase Equity No Change : On July 31, the company pays the note in full. What journal entry should the company make to record the payment on July 31? Dr Notes Payable Dr Interest Expense 28000 Cr Cash What effect does this entry have on the accounting equation? Assets iabilitiesEquity Decrease -Decrease +Decrease

Explanation / Answer

Journal entry :

Effect :

Journal entry :

Effect :

Date account & explanation debit credit Account payable 28000 Notes payable 28000

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