Blue Corporation sells rock-climbing products and also operates an indoor climbi
ID: 2403177 • Letter: B
Question
Blue Corporation sells rock-climbing products and also operates an indoor climbing facility for climbing enthusiasts. During the last part of 2017, Blue had the following transactions related to notes payable.
Dec 31 Recorded accrued interest for the Prime Bank note and the vehicle note.
Sept. 1 Issued a $16,800 note to Pippen to purchase inventory. The 3-month note payable bears interest of 8% and is due December 1. (Blue uses a perpetual inventory system.) Sept. 30 Recorded accrued interest for the Pippen note. Oct. 1 Issued a $22,800, 9%, 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 $28,800 note and paid $8,000 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.
Post the above entries to the Notes Payable, Interest Payable, and Interest Expense accounts Notes Payable Interest Expense Interest PayableExplanation / Answer
Notes Payable Date Account's tittle Debit $ Account's tittle Credit $ 1-Sep Inventory 16,800 1-Oct Cambling wall 22,800 1-Nov Vehicle 28,800 1-Dec Cash 16,800 31-Dec Ending balance 51,600 TOTAL 68,400 TOTAL 68,400 Interest expenses Date Account's tittle Debit $ Account's tittle Credit $ 30-Sep Interest payable ( Pippen note, see note-1) 112 31-Oct Interest payable ( Pippen note, see note-1) 112 31-Oct Interest payable ( Prime Bank note, see note-2) 171 30-Nov Interest payable ( Pippen note, see note-1) 112 30-Nov Interest payable ( Prime Bank note, see note-2) 171 30-Nov Interest payable ( Vehicle Note, see note-3) 144 31-Dec Ending balance 822 TOTAL 822 TOTAL 822 Interest Payable Date Account's tittle Debit $ Account's tittle Credit $ 30-Sep Interest expenses 112 31-Oct Interest expenses 112 31-Oct Interest expenses 171 30-Nov Interest expenses 112 30-Nov Interest expenses 171 30-Nov Interest expenses 144 1-Dec Cash 336 31-Dec Ending balance 486 TOTAL 822 TOTAL 822 Working note; 1 1-months interest at 8% rate of interest for the note $ 16,800 = $ 16,800 x 8% x 1/12 = $ 112 2 1-months interest at 9% rate of interest for the note $ 22,800 = $ 22,800 x 9% x 1/12 = $ 171 3 1-months interest at 6% rate of interest for the note $ 28,800 = $ 28,800 x 6% x 1/12 = $ 144