Problem 10-2A Date Account Titles and Explanation Debit Credit SHOW LIST OF ACCO
ID: 2570582 • Letter: P
Question
Problem 10-2A
Date
Account Titles and Explanation
Debit
Credit
SHOW LIST OF ACCOUNTS
Notes Payable
Interest Expense
Interest Payable
SHOW LIST OF ACCOUNTS
SHOW LIST OF ACCOUNTS
Problem 10-2A
Sheffield Corporation sells rock-climbing products and also operates an indoor climbing facility for climbing enthusiasts. During the last part of 2017, Sheffield had the following transactions related to notes payable.Sept. 1 Issued a $15,600 note to Pippen to purchase inventory. The 3-month note payable bears interest of 9% and is due December 1. (Sheffield uses a perpetual inventory system.) Sept. 30 Recorded accrued interest for the Pippen note. Oct. 1 Issued a $18,000, 9%, 4-month note to Prime Bank to finance the purchase of a new climbing wall for advanced climbers. The note is due February 1. Oct. 31 Recorded accrued interest for the Pippen note and the Prime Bank note. Nov. 1 Issued a $26,400 note and paid $8,000 cash to purchase a vehicle to transport clients to nearby climbing sites as part of a new series of climbing classes. This note bears interest of 6% and matures in 12 months. Nov. 30 Recorded accrued interest for the Pippen note, the Prime Bank note, and the vehicle note. Dec. 1 Paid principal and interest on the Pippen note. Dec. 31 Recorded accrued interest for the Prime Bank note and the vehicle note.
Explanation / Answer
Date Accounting titles & Explanations Debit Credit 1-Sep Merchandise inventory 15,600 notes payable -pippen 15,600 30-Sep interest expense 117 interest payable 117 (15600*9%*1/12) 1-Oct Climbing wall 18,000 notes payable -prime bank 18,000 31-Oct interest expense 252 interest payable 252 (117 +18000*9%*1/12) 1-Nov vechicle 34,400 cash 8,000 notes payable 26,400 30-Nov interest expense 384 interest payable 384 (117+135+132) 1-Dec notes payable-pippen 15,600 interest payable (117*3) 351 Cash 15,951 31-Dec interest expense 267 interest payable 267 Notes payable 1-Sep 15,600 1-Oct 18,000 1-Nov 26,400 bal 60,000 interest expense 30-Sep 117 31-Oct 252 30-Nov 384 31-Dec 267 bal 1020 interest payable 1-Dec 351 30-Sep 117 31-Oct 252 30-Nov 384 31-Dec 267 bal 669 Balance sheet (partial) notes payable 60,000 interest payable 669 interest expense incurred during the year 1020
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.