During January 2018, the following transactions occur: January 1 Borrow $100,000

Question

During January 2018, the following transactions occur: January 1 Borrow $100,000 from Captive Credit Corporation. The installment note bears interest at 7% annually and matures in 5 years. Payments of $1,980 are required at the end of each month for 60 months. January 4 Receive $31,000 from customers on accounts receivable. January 10 Pay cash on accounts payable, $11,000. January 15 Pay cash for salaries, $28,900. January 30 Firework sales for the month total $195,000. Sales include $65,000 for cash and $130,000 on account. The cost of the units sold is $112,500. January 31 Pay the first monthly installment of $1,980 related to the $100,000 borrowed on January 1. Round your interest calculation to the nearest dollar. Make Journal Entry

Explanation / Answer

Journal entry:

Date Description Debtit Credit Jan 4 Cash $31,000 To Accounts recievable $31,000 Jan 10 A/c paayble $11,000 to cash $11,000 Jan15 Salary expense $28,900 to cash $28,900 Jan30 Cash 65,000 Account recievable 130,000 $195,000 Cost of goods sold $112,500 to inventory $112,500 Jan31 Interest expense 583 Notes payable 1397 to cash $1980

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