Problem 10-5A (Part Level Submission) (a) Prepare journal entries for the transa

Question

Problem 10-5A (Part Level Submission)

(a)

Prepare journal entries for the transactions noted above. (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

Problem 10-5A (Part Level Submission)

Flounder Corporation sells rock-climbing products and also operates an indoor climbing facility for climbing enthusiasts. During the last part of 2019, Flounder had the following transactions related to notes payable.
Sept. 1 Issued a $14,400 note to Pippen to purchase inventory. The 3-month note payable bears interest of 8% and is due December 1. (Flounder uses a perpetual inventory system.) Sept. 30 Recorded accrued interest for the Pippen note. Oct. 1 Issued a $21,600, 8%, 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 $8,900 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 7% 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 Accounts Title and Explanation Debit Credit 1-Sep Inventory 14400 Notes Payable 14400 30-Sep Interest Expenses (14400*8%*1/12) 96 Interest Payable 96 1-Oct Equipment 21600 Notes Payable 21600 31-Oct Interest Expenses (21600*8%*1/12+96) 240 Interest Payable 240 1-Nov Equipment 35300 Notes Payable 26400 Cash 8900 30-Nov Interest Expenses(240+(26400*7%*1/12) 394 Interest Payable 394 1-Dec Notes Payable 14400 Interest Payable 288 Cash 14688 31-Dec Interest Expenses (21600*8%*1/12)+(26400*7%*1/12) 298 Interest Payable 298

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