Question

Coolidge Company owes $1,000 for merchandise inventory purchased from Ross Company during April. The amount owed is now past-due. On June 15, Coolidge meets with Ross and convinces Ross to accept $400 cash and a 30-day, 10 percent, $600 note payable to replace the account payable.

Note: Enter debits before credits. Date Jun 15 General Journal Debit / Credit

Answer 1

Dr Accounts payable $1000

Cr Cash $400

Cr Notes payable $600

Step-by-step explanation:

The $1000 owed was previously a credit in the accounts payable,since it has now been settled partly in cash and the remainder with notes payable,the accounts payable is debited with $1000.

Besides,the cash account should have witnessed an outflow of $400 and should be credited with $400.

Finally,$600 of the $1000 has been converted into notes payable instead of accounts payable and the notes payable should receive a credit of $600