Question

A business issued a 120-day, 5% note for $60,000 to a creditor on account. Journalize the entries to record (a) the issuance of the note and (b) the payment of the note at maturity, including interest. Assume a 360-day year. If an amount box does not require an entry, leave it blank. a. b.

Answer 1

cash 60,000 debit

note payable 60,000 credit

--to record issuance--

interest expense 1,000 debit

Amortizacion Land 34,000 debi

---to reocrd sale of receiptst

Step-by-step explanation:

Interest payment:

principal x rate x time (being time and rate expressed in protion of a year

60,000 x 0.05 x 120/360 = 1,000

Answer 2

Journal Entries are the chronological representation of the regular business transactions. The journal entry only records the monetary business transactions.

It is the first step in the accounting process. The entries recorded are further used to prepare general ledger of each account individually.

The image for the journal entries is attached below:

Interest is an additional money charge a borrower has to pay on the loan he or she has taken.

It can be calculated by the following formula:

`\text{Interest} = \text{Principal (P)}\; *\; \text{Rate (R)}\; *\; \text{Time (T)}`

`\text{Interest} = 60000\; *\; 0.05\; *\; (120)/(360)\;= 999.999`

= 1,000