Question

Brief Exercise 169 On December 1, Maisins Furniture Corporation borrowed $10,000 on a 90-day, 6% note. Prepare the entries to record the issuance of the note, the accrual of interest at year end, and the payment of the note. (Credit account titles are automatically indented wh the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter for the amounts.)

Answer 1

1. Dr Cash $ 10,000

Cr Notes Payable $ 10,000

2. Dr Interest Expense $75

Cr Interest Payable $75

3. Dr Notes Payable $ 10,000

Dr Interest Expense $ 225

Dr Interest Payable $ 75

Cr Cash $ 10,300

Step-by-step explanation:

Preparation of the entries to record the issuance of the note, the accrual of interest at year end, and the payment of the note

1. Preparation of the entries to record the issuance of the note

Dr Cash $ 10,000

Cr Notes Payable $ 10,000

(Being record of issuance of the note )

2. Preparation of the entries to record the accrual of interest

Dr Interest Expense $75

($10,000*9%*30 days/360 days)

Cr Interest Payable $75

(Being Interest accrued for 30 days)

3. Preparation of the entries to record the payment of the note

Dr Notes Payable $ $10,000

Dr Interest Expense $ 225 ($10,000*9%*90 days/360days)

Dr Interest Payable $ 75

($10,000*9%*30 days/360 days)

Cr Cash $ 10,300

($10,000+$225+$75)

(Being to record payment of the note)