Problem 10-2A Grouper Corporation sells rock-climbing products and also operates

Question

Problem 10-2A Grouper Corporation sells rock-climbing products and also operates an indoor climbing facility for climbing enthusiasts. During the last part of 2017, Grouper had the following transactions related to notes payable Sept. Issued a $15,600 note to Pippen to purchase inventory. The 3-month note payable bears interest of 7% and is due December 1, (Grouper 1 uses a perpetual inventory system.) Recorded accrued interest for the Pippen note Issued a $22,800, 1096, 4-month note to Prime Bank to finance the purchase of a new climbing wall for advanced climbers. The note is due 30 Oct. 1 February 1 Recorded accrued interest for the Pippen note and the Prime Bank note 31 Nov. 1 Nov Issued a $30,000 note and paid $9,300 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 8% and matures in 12 months Recorded accrued interest for the Pippen note, the Prime Bank note, and the vehicle note Paid principal and interest on the Pippen note Recorded accrued interest for the Prime Bank note and the vehicle note Dec Dec 31 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

Explanation / Answer

Interest expense incurred during the year: $1243

Date Account Titles and Explanation Debit Credit Sept. 1 Inventory 15600 Notes payable 15600 Sept. 30 Interest expense ($15600 x 7% x 1/12) 91 Interest payable 91 Oct. 1 Cash 22800 Notes payable 22800 Oct. 31 Interest expense [$91 + ($22800 x 10% x 1/12)] 281 Interest payable 281 Nov. 1 Vehicle 39300 Cash 9300 Notes payable 30000 Nov. 30 Interest expense 481 Interest payable 481 $91 + $190 + ($30000 x 8% x 1/12)] Dec. 1 Notes payable 15600 Interest payable 273 Cash 15873 Dec. 31 Interest expense ($190 + $200) 390 Interest payable 390

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