Date Account Titles and Explanation Debit Credit Jan. 2 Feb. 1 Mar. 31 Apr. 1 Ju

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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

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Notes Payable

Interest Payable

Interest Expense

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Graves Company
Balance Sheet
December 31

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The following are selected transactions of Graves Company. Graves prepares financial statements quarterly.
Jan. 2 Purchased merchandise on account from Ally Company, $32,550, terms 3/10, n/30. (Graves uses the perpetual inventory system.) Feb. 1 Issued a 6%, 2-month, $32,550 note to Ally in payment of account. Mar. 31 Accrued interest for 2 months on Ally note. Apr. 1 Paid face value and interest on Ally note. July 1 Purchased equipment from Clark Equipment paying $14,700 in cash and signing a 7%, 3-month, $38,160 note. Sept. 30 Accrued interest for 3 months on Clark note. Oct. 1 Paid face value and interest on Clark note. Dec. 1 Borrowed $27,000 from the Jonas Bank by issuing a 3-month, 6% note with a face value of $27,000. Dec. 31 Recognized interest expense for 1 month on Jonas Bank note.

Explanation / Answer

Journal Entries

Ledger Accounts

Balance Sheet

What is total interest expense for the year

JOURNAL Date Accounts Titles and Explainations Debit Credit Jan. 2 Merchandise Inventory $32,550       Accounts Payable $32,550 (To record purchase of inventory on account) Feb. 1 Accounts Payable $32,550         Notes Payable $32,550 (To record issue of notes payable in payment of account) Mar. 31 Interest Expense $326          Interest Payable $326 ( To record accrual of interest on note payable) April. 1 Note Payable $32,550 Interest Payable $326         Cash $32,876 (To record Payment of Note payable with interest) July. 1 Equipment $52,860        Cash $14,700        Note Payable $38,160 (To record Purchase of Equipment by cash and Note payable) Sept. 30 Interest Expense $668          Interest Payable $668 ( To record accrual of interest on note payable) Oct. 1 Note Payable $38,160 Interest Payable $668         Cash $38,828 (To record Payment of Note payable with interest) Dec. 1 Cash $27,000          Note Payable $27,000 (Borrowed cash by issue of note payable) Dec. 31 Interest Expense $135          Interest Payable $135 ( To record accrual of interest on note payable)

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