Question

Sarasota Corporation sells rock-climbing products and also operates an indoor climbing facility for climbing enthusiasts. During the last part of 2017, Sarasota had the following transactions related to notes payable.

Sept. 1 Issued a $16,800 note to Pippen to purchase inventory. The 3-month note payable bears interest of 9% and is due December 1. (Sarasota uses a perpetual inventory system.)
Sept. 30 Recorded accrued interest for the Pippen note.
Oct. 1 Issued a $22,800, 10%, 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 $27,600 note and paid $8,100 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 6% 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.
I was wondering how to do the journal entries for...
1. October 1st
2. November 1st
3. November 30th
4. December 31st

Answer 1

Sarasota Corporation

Journal Entries for the following dates:

Oct. 1: Debit Equipment $22,800

Credit 10% Notes Payable (Prime Bank) $22,800

To record the issuance of a 4-month note.

Nov. 1: Debit Vehicle $35,700

Credit Cash $8,100

Credit 6% Notes Payable $27,600

To record the issuance of a 12-month note and cash for purchased vehicle.

Nov. 30: Debit Interest Expense $454

Credit Interest payable $454

To accrue the interests due on the notes.

Dec. 31: Debit Interest Expense $328

Credit Interest payable $328

To accrue the interests due on the outstanding notes.

Step-by-step explanation:

a) Data and Analysis:

Sept. 1: Inventory $16,800 9% Notes Payable (Pippen) $16,800

3-month note

Sept. 30: Interest Expense $126 Interest payable $126

Oct. 1: Equipment $22,800 10% Notes Payable (Prime Bank) $22,800

4-month note

Oct. 31: Interest Expense $316 Interest payable 316

Nov. 1: Vehicle $35,700 Cash $8,100 6% Notes Payable $27,600

12-month note

Nov. 30: Interest Expense $454 Interest payable $454

Dec. 1: Notes payable (Pippen) $16,800 Interest payable $378 Cash $17,178

Dec. 31: Interest Expense $328 Interest payable $328