Exercise 10-1 C.S. Lewis Company had the following transactions involving notes
ID: 2550124 • Letter: E
Question
Exercise 10-1
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 $57,000 from First National Bank by signing a 9-month, 8% note. Nov. 1, 2017 Borrows $68,400 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
Date Accounts & explanation Debit Credit 2017 1-Jul Cash 57,000 8% notes payable 57,000 ( To record the borrowing of 8% note from national bank) 1-Nov Cash 68,400 6% notes payable 68,400 ( To record the borrowing of 6% note from LYON county 31-Dec Interest expenses (57000*8%*6/12) 2,280 interest payable 2,280 ( To record the adjusting entry for interest for national bank) 31-Dec Interest expenses (68400*6%*2/12) 684 interest payable 684 To record the adjusting entry for the interest for lyon county 1-Feb-18 6% notes payable 68,400 Interest payable 684 Interest expenses ((68400*6%*1/12)) 342 cash 69,426 ( To record the maturity of notes payable for Lyon county) 1-Apr 8% notes payable 57,000 Interest payable 2,280 Interest expenses(57000*8%*3/12) 1,140 cash 60,420 ( To record the maturity of notes payable for national bank)
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