Problem 5 – Worth 3 pts.—1/2 pt. for each account title and Interest amount Groo

Question

Problem 5 – Worth 3 pts.—1/2 pt. for each account title and Interest amount Groovy Swing is a retail store specializing in golf equipment and apparel. On February 1, 2014, the company borrows $250,000 cash from the bank with a six-month, 6% note payable. Required: Prepare the company’s necessary journal entries on February 1st and the note's maturity date. Solution: Date Account Debit Credit Feb. 1 Aug. 1 Problem 5 – Worth 3 pts.—1/2 pt. for each account title and Interest amount Groovy Swing is a retail store specializing in golf equipment and apparel. On February 1, 2014, the company borrows $250,000 cash from the bank with a six-month, 6% note payable. Required: Prepare the company’s necessary journal entries on February 1st and the note's maturity date. Solution: Date Account Debit Credit Feb. 1 Aug. 1

Explanation / Answer

Cash

Notes Payable

250,000

250,000

Notes Payable

Interest Expense

Cash

250,000

7,500

257,500

Interest Expense = 250,000 * 0.06 * 6/12 = 7,500

Date Accounts Debit Credit Feb. 1

Cash

Notes Payable

250,000

250,000

Aug. 1

Notes Payable

Interest Expense

Cash

250,000

7,500

257,500

Related Questions

Navigate

• Browse (All)
• Browse P
• Subjects

---