Ermlar Corporation sells rock- climbing products and also operates an indoor cli

Question

Ermlar Corporation sells rock- climbing products and also operates an indoor climbing facility for climbing enthusiasts. During the last part of 2014, Ermlar had the following transactions related to notes payable Issued a $14,400 note to Lippert to purchase inventory. the 3-month note payable bears interest of 8% and is December 1.(Ermlar uses a perpetual inventory System.) Recorded accrued interest for the Lippert note. Issued a $20,4000,8%,4-month note to Shanee Bank to finance the purchase of a new climbing wall for advanced climbers. the note is due February 1. Recorded accrued interest for the Lippert note and the Shanee Bank note. Issued a $28,800 note and paid $7,800 cash to purchase a vehicle to transport clients to nearby climbing sites as part of a new series of climbing classes.This note bears interest of 6% and matures in 12 months. Recorded accrued interest for the Lippert note, the Shanee Bank note, and the vehicle note. Paid principal and interest on the Lippert note. Recorded accrued interest on the Lippert note Recorded accured interest for the Shanee Bank note and the Vehicle note. Try again Prepare Journal entries for the transactions noted above

Explanation / Answer

Answer:

31 oct Interest expense A/C Dr. $232

                To interest payable A/C                     $232    [(20400*8%*1/12)+96]

30 Nov    Interest expense A/C Dr. $376

                To interest payable A/C                     $376    [(28800*6%*1/12)+232]

1 Dec   Dr Notes Payable 14400
            Dr Interest Payable 288 ($14400 x 8% x 3/12)
             Cr Cash 14688

31 Dec     Interest expense A/C Dr. $280

                To interest payable A/C                     $280    [(144+136]

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