Date Account Titles and Explanation Debit Credit Jan. 2 Feb. 1 Mar. 31 Apr. 1 Ju
ID: 2459783 • Letter: D
Question
Date
Account Titles and Explanation
Debit
Credit
Jan. 2
Feb. 1
Mar. 31
Apr. 1
July 1
Sept. 30
Oct. 1
Dec. 1
Dec. 31
Notes Payable
Interest Payable
Interest Expense
Blanco Company
Balance Sheet (Partial)
December 31
Jan. 2 Purchased merchandise on account from Nunez Company, $31,200, terms 2/10, n/30. (Blanco uses the perpetual inventory system.) Feb. 1 Issued a 9%, 2-month, $31,200 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 $12,210 in cash and signing a 10%, 3-month, $52,800 note. Sept. 30 Accrued interest for 3 months on Marson note. Oct. 1 Paid face value and interest on Marson note. Dec. 1 Borrowed $34,800 from the Paola Bank by issuing a 3-month, 8% note with a face value of $34,800. Dec. 31 Recognized interest expense for 1 month on Paola Bank note.
Explanation / Answer
(a) Jan. 2 Merchandise Inventory or
Purchases.................................................................. 31,200
Accounts Payable............................................... 31,200
Feb. 1 Accounts Payable......................................................... 31,200
Notes Payable...................................................... 31,200
Mar. 31 Interest Expense........................................................... 468
($31,200 X 9% X 2/12)
Interest Payable.................................................. 468
Apr. 1 Notes Payable................................................................ 31,200
Interest Payable............................................................ 468
Cash..................................................................... 31,668
July 1 Equipment..................................................................... 65,010
Cash..................................................................... 12,210
Notes Payable...................................................... 52,800
Sept. 30 Interest Expense........................................................... 1,320
($52,800 X 10% X 3/12)
Interest Payable.................................................. 1,320
Oct. 1 Notes Payable................................................................ 52,800
Interest Payable............................................................ 1,320
Cash..................................................................... 54,120
Dec. 1 Cash 34,800
Notes Payable...................................................... 34,800
Dec. 31 Interest Expense........................................................... 232
($34,800 X 8% X 1/12)
Interest Payable.................................................. 232
(b)
Notes Payable
4/1 31,200
10/1 52,800
2/1 31,000
7/1 52,800
12/1 34,800
12/31 Bal. 34,800
Interest Payable
4/1 468
10/1 1,320
3/31 468
9/30 1,320
12/31 232
12/31 Bal. 232
Interest Expense
3/31 468
9/30 1,320
12/31 232
12/31 Bal. 2,020
(c) Current liabilities
Notes payable.................................................................................... $34,800
Interest payable................................................................................ 232 $35,032
(d) Total interest is $2,020.
Notes Payable
4/1 31,200
10/1 52,800
2/1 31,000
7/1 52,800
12/1 34,800
12/31 Bal. 34,800
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