Question

Journalize the following entries on the books of Winston Co. for August 1, September 1, and November 30. (Assume a 360-day year is used for interest calculations.)

Aug. 1 Winston Co. purchased merchandise for $75,000 on account from Bagley Co., terms n/30.
Sept. 1 Winston Co. issued a 90-day, 6% note for $75,000 on account.
Nov. 30 Winston Co. paid the amount due.

Answer 1

Answer: PLease see explanation for answers

Step-by-step explanation:

Journal to record Purchase of Inventory

Date Account Title Debit Credit

Aug.1 Merchandise Inventory $75,000

Bagley Co. $75,000

To record Issue of Note

Sep 1 Bagley Co. $75,000

6% Note Payable $75,000

To Record Payment of Note at due date

Nov 30 6% Note Payable $75,000

Interest Expenses $1,125

Cash $76,125

Calculation

Interest expense = Principal x rate x Time

= $75,000 x 60 x 90/360

=$1,125