May 1, 2016 Interest Expense $120 Consider the following note payable transactio
ID: 2452900 • Letter: M
Question
May 1, 2016 Interest Expense $120
Consider the following note payable transactions of Concert Video Productions.
2015
May 1
Purchased equipment costing $12,000 by issuing one-year, 3% note payable.
Dec. 31
Accrued interest on the note payable.
2016
May 1
Paid the note payable plus interest at maturity.
Journalize the transactions for the company.
2015
May 1
Purchased equipment costing $12,000 by issuing one-year, 3% note payable.
Dec. 31
Accrued interest on the note payable.
2016
May 1
Paid the note payable plus interest at maturity.
Explanation / Answer
Journal Entries Date Particulars Dr Amt Cr Amt May1 15 Equipment Dr 12,000.00 To 3% Note Payable 12,000.00 Dec 31 15 Interest Expense Dr 240.00 To interest Payable 240.00 (12000*8*3%/12) May1 16 Interest Expense Dr 120.00 To interest Payable 120.00 (12000*4*3%/12) May1 16 Interest Payable 360.00 3% Notes Payable 12,000.00 To cash A/C 12,360.00