C.S. Lewis Company had the following transactions involving notes payable. Prepa

Question

C.S. Lewis Company had the following transactions involving notes payable.

Prepare journal entries for each of the transactions. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Record journal entries in the order presented in the problem.)

Date

Account Titles and Explanation

Debit

Credit

(To record adjusting entry for First National Bank note)

(To record adjusting entry for Lyon County State Bank note)

July 1, 2017 Borrows $52,000 from First National Bank by signing a 9-month, 8% note. Nov. 1, 2017 Borrows $62,400 from Lyon County State Bank by signing a 3-month, 6% note. Dec. 31, 2017 Prepares adjusting entries. Feb. 1, 2018 Pays principal and interest to Lyon County State Bank. Apr. 1, 2018 Pays principal and interest to First National Bank.

Explanation / Answer

Interest Calculation:

First National Bank : $52000 *(6/12)*(8%) = $2,096

Lyon County State Bank = $62,400 *(2/12)*(6%) =$624

Date Journal Entry Debit Credit July 1, 2017 Cash $52,000 FNB-Notes Payable $52,000 Borrows Money from First National Bank through notes Payable Nov. 1, 2017 Cash $62,400 Notes Payable $62,400 Borrows Money from Lyon County State Bank through notes Payable Dec. 31, 2017 Interest Expense $2,096 Interst Payable $2,096 Interest Payable by First National Bank as on 31 dec 2017 Dec. 31, 2017 Interest Expense $624 Interst Payable $624 Interest Payable by Lyon County State Bank as on 31 dec 2017 Feb. 1, 2018 Notes Payable $62,400 Interst Payable $624 Cash $63,024 Repayment of Interest and Notes of Lyon County State Bank Apr. 1, 2018 Notes Payable $52,000 Interst Payable $2,096 Cash $54,096 Repayment of Interest and Notes of First National Bank

Related Questions

Navigate

• Browse (All)
• Browse C
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.