Exercise 10-1 Padillio Company had the following transactions involving notes pa

Question

Exercise 10-1 Padillio Company had the following transactions involving notes payable July 1, 2014 Borrows $97,500 from Fourth National Bank by signing a 9-month, 8% note. Nov. 1, 2014 Borrows $53,500 from Livingston State Bank by signing a 3-month, 9% note Dec. 31, Prepares adjusting entries. 2014 Feb. 1, 2015 Pays principal and interest to Livingston State Bank. Apr. 1, 2015 Pays principal and interest to Fourth National Bank. Prepare journal entries for each of the transactions. (Round answers to O decimal places, e.g. 125. Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Explanation / Answer

July 1, 2014 Bank a/c      Dr. $97,500 To Fourth National Bank a/c $97,500 (Being amount of $97,500 borrowed @8% for 9 months) November 1, 2014 Bank a/c     Dr. $53,500 To Livingston State Bank a/c $53,500 (Being amount of $53,500 borrowed @9% for 3 months) December 31, 2014 Interest expense a/c    Dr. $3,900 To Fourth National Bank a/c $3,900 (Being interest expense accrued on loan for 6 months) Interest expense a/c    Dr. $803 To Livingston State Bank a/c $803 (Being interest expense accrued on loan for 2 months) February 1, 2014 Interest expense a/c    Dr. $650 To Fourth National Bank a/c $650 (Being interest expense accrued on loan for 1 month) Fourth National Bank a/c     Dr. $102,050 To Bank a/c $102,050 (Being amount due to Fourth National Bank has been settled) April 1, 2014 Interest expense a/c    Dr. $1,204 To Livingston State Bank a/c $1,204 (Being interest expense accrued on loan for 3 months) Livingston State Bank a/c    Dr. $55,507 To Bank a/c $55,507 (Being amount due to Livingston State Bank has been settled)

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