McCullough Corporation sells rock-climbing products and also operates an indoor
ID: 2442891 • Letter: M
Question
McCullough Corporation sells rock-climbing products and also operates an indoor climbing facility for climbing enthusiasts. During the last part of 2010, McCullough had the following transactions related to notes payable.Sept. 1 Issued a $9,000 note to Jernigan to purchase inventory. The 3-month note payable bears interest of 8% and is due December 1.
Sept. 30 Recorded accrued interest for the Jernigan note.
Oct. 1 Issued a $18,064, 10%, 4-month note to Lebo 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 Jernigan note and the Lebo Bank note.
Nov. 1 Issued a $20,622 note and paid $7,616 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 Jernigan note, the Lebo Bank note, and the vehicle note.
Dec. 1 Paid principal and interest on the Jernigan note.
Dec. 31 Recorded accrued interest for the Lebo Bank note, and the vehicle note.
Incorrect.
Prepare journal entries for the transactions noted above. (List multiple debit/credit entries from largest to smallest amount, e.g. 10, 5, 2. Round all answers to 0 decimal places.)
Date Account/Description Debit Credit
Sept. 1 Merchandise inventory 9000
Notes payable 9000
Sept. 30 Interest expense
Interest payable
Oct. 1 Climbing wall 18064
Notes payable 18064
Oct. 31 Interest expense
Interest payable
Nov. 1 Vehicles 28238
Notes payable 20622
Cash 7616
Nov. 30 Interest expense
Interest payable
Dec. 1 Notes payable 9000
Interest payable
Cash
Dec. 31 Interest expense
Interest payable
complete the missing transactions.
Explanation / Answer
9/1 Inventory - 12,000 Dr Note Payable - 12,000 Cr 9/30 Interest Expense - 80 Dr Interest Payable - 80 Cr 10/1 Climbing Wall - 16,000 Dr Note Payable - 16,000 Cr 10/31 Interest Expense - 200 Dr Interest Payable - 200 Cr 11/1 Vehicle - 33,000 Dr Note Payable - 25,000 Cr Cash - 8000 Cr 11/30 Interest Expense - 325 Dr Interest Payable - 325 Cr 12/1 Interest Payable - 12,240 Dr Cash - 12,240 Cr 12/31 Interest Expense - 245 Dr Interest Payable - 245 Cr