Adjusting Entries for Interest At December 31, 2014, Hoffman Corporation had two

Question

Adjusting Entries for Interest At December 31, 2014, Hoffman Corporation had two notes payable outstanding (notes 1 and 2). At December 31.2015, Hoffman also had two notes payable outstanding (notes 3 and 4). These notes are described below Date of note Principal Amount Interest Rate Number of Days December 31, 2014 Note 1 Note 2 December 31, 2015 Note 3 Note 4 11/16/2014 $15,000 8% 120 12/4/2014 6,000 60 12/7/2015 60 12/21/2015 18,000 30 Required a Prepare the adjusting entries for interest at December 31, 2014 b. Assume that the adjusting entries were made at becember 31.2014. Prepare the 2018 journal entries to r were outstanding at December 31/ 2014 c Prepare the adjusting entries for interest at December 31, 2015 Round answers to nearest dollar, Use 360 days for interest calculations when applicable tes that

Explanation / Answer

Solution a:

Solution b:

Solution c:

Journal Entries Date Particulars Debit Credit 31-Dec-14 Interest Expense Dr ($15,000*8%*45/360) $150.00              To Interest Payable $150.00 (To record interest on note 1) 31-Dec-14 Interest Expense Dr ($16,000*9%*27/360) $108.00              To Interest Payable $108.00 (To record interest on note 2)

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