On June 30, 2009, Sideways Movers had $243,000 in current assets and $211,000 in

Question

On June 30, 2009, Sideways Movers had $243,000 in current assets and $211,000 in current liabilities. On August 1, 2009, Sideways received $50,000 from an issue of promissory notes that will mature in 2012. The notes pay interest on February 1 at an annual rate of 6 percent. Sideways' fiscal year ends on December 31.

Prepare the journal entry on August 1, 2009, to record the issue of notes payable. (Omit the "$" sign in your response.)

On June 30, 2009, Sideways Movers had $243,000 in current assets and $211,000 in current liabilities. On August 1, 2009, Sideways received $50,000 from an issue of promissory notes that will mature in 2012. The notes pay interest on February 1 at an annual rate of 6 percent. Sideways' fiscal year ends on December 31.

Explanation / Answer

August 1,2009 cash $50,000              Notes payable $50,000 Dec 31,2009 interest expenses $1,250                Interest payable $1,250 50000*6*5/12=$1250 Feb 1 2010 interest payable $1,250 interest expenses $250                  cash $1,500 Current ratio= Current assets/Current liabilities Current assets $243,000 Current liabilities $211,000 Current ratio=243000/211000= 1.15:1 August 1,2009 cash $50,000              Notes payable $50,000 Dec 31,2009 interest expenses $1,250                Interest payable $1,250 50000*6*5/12=$1250 Feb 1 2010 interest payable $1,250 interest expenses $250                  cash $1,500 Current ratio= Current assets/Current liabilities Current assets $243,000 Current liabilities $211,000 Current ratio=243000/211000= 1.15:1

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