Problem 10-2A Prepare journal entries for the listed transactions and events. Da

Question

Problem 10-2A

Prepare journal entries for the listed transactions and events.

Date

Account Titles and Explanation

Debit

Credit

Apr. 1

Oct. 1

Post to the accounts Notes Payable, Interest Payable, and Interest Expense. (Post entries in the order of journal entries presented in the previous part.)

Notes Payable

Interest Payable

Interest Expense

Show the balance sheet presentation of notes and interest payable at December 31.

Problem 10-2A

The following are selected transactions of Blanco Company. Blanco prepares financial statements quarterly.
Jan. 2 Purchased merchandise on account from Nunez Company, $21,600, terms 3/10, n/30. (Blanco uses the perpetual inventory system.) Feb. 1 Issued a 9%, 2-month, $21,600 note to Nunez in payment of account. Mar. 31 Accrued interest for 2 months on Nunez note. Apr. 1 Paid face value and interest on Nunez note. July 1 Purchased equipment from Marson Equipment paying $10,400 in cash and signing a 10%, 3-month, $70,800 note. Sept. 30 Accrued interest for 3 months on Marson note. Oct. 1 Paid face value and interest on Marson note. Dec. 1 Borrowed $27,600 from the Paola Bank by issuing a 3-month, 8% note with a face value of $27,600. Dec. 31 Recognized interest expense for 1 month on Paola Bank note.

Explanation / Answer

a.

b. Notes payable

Interest payable

Interest expense

c.   Balance Sheet (Partial)

   Current liabilities :

      Notes payable = 27600

Interest payable = 184

= 27784

d. Total interest = $2278

Date Accounts title Dr. Cr. Jan 2 Inventory $21,600 To Accounts payable $21,600 Feb 1 Accounts payable $21,600 To Notes payable $21,600 Mar 31 Interest expense[21600 * 9%/12 *2 months] 324 To interest payable 324 Apr 1 Notes payable 21,600 interest payable 324 To cash 21924 july 1 Equipment 81200 To cash 10400 To notes payable 70800 sept 30 Interest expense [70800 *10%/12 * 3] 1770 To interest payable 1770 oct 1 Notes payable 70800 Interest payable 1770 To cash 72570 . Dec 1 Cash $27,600 To notes payable $27,600 Dec 31 Interest expense [27600* 8%/12 * 1 month] 184 To interest payable 184

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