On November 1, Aisn Gompany signed a 120-day, 9% note payable, with a face value

Question

On November 1, Aisn Gompany signed a 120-day, 9% note payable, with a face value of $18,000. Alan made the appropriate year-end accurate. What is the journal entry as of March 1 to record the payment of the note assuming no reversing entry was made? Debit Notes Payable $18,540, credit Interest Payable $270, credit Interest Expense $270; credit Cash $18,000 Debit Cash $18,270. credit Notes Payable $18,270. Debit Notes Payable $18,000, debit Interest Payable $270; credit Cash $18,270. Debit Notes Payable $18,000; debit Interest Expense $540; credit Cash $18,540 Debit Notes Payable $18,000; debit Interest Payable $270; debit interest Expense $270; credit Cash $18,540.

Explanation / Answer

Ans e Debit Notes payable 18000 debit Interest payable by $270 and interest expenses $279 and cash $18540 at the time of accrual the entry would have been Dr Cr Interest Expense (18000*9%*60/360) 270 Interest Payable 270 and this entry is not reversed Entry would be Notes payable 18000 Interest payable 270 Interest Expenses 270 Cash 18540 Being entry made at maturity of notes payable 60 days interest was already accurued so debited and interest expense for Jan and feb is debited and cash is credited with total amount paid) Total Interest 18000*9%*120/360 540

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