Chart of Accounts General Journal ruc Eddie Edwards and Phil Bell own hree month
ID: 2557844 • Letter: C
Question
Chart of Accounts General Journal ruc Eddie Edwards and Phil Bell own hree months of 20- and operale The Second Hand Equipme nt Shop. The following transactions involving notes and interest were complexed during the last issued a $6,800, 60-day 5% note to Mac Farm Equipment for purchase of merchandise Received a $2,000. 60-day, 6% note torn R. Chambers in payment for sale Ot merchandise Oct 1 15 Nov 1 Discounted t the note received from R. Chambers on October 15 at Merchants National Bank, The discount rate is 7% 1 20 30 10 16 Borrowed $5,000 from First National Bank on a three-month, non-interesthearing note that was d Received a S4000, 90-day, 65% note tom L. Resine in payment Issued a check to Mac Farm Equipment in payment ot the note issued on October 1, includ issued a $3,000, 90-day, 6% note to Remak Tractors to extend time for payment of an account payable of an account receivable Dec Received notncabon from Merchants National Bank that R. Chambers has dishonored his note. A ch the note plus a $20 bank tee that must be paid to the bank. Required 1. Prepare general jourmal entries for the transacions 2. Prepare necessary adjusing enties for he notes outstanding on December 31Explanation / Answer
1) Journal Entries: Date Accounts Titles Debit $ Credit $ 1-Oct Merchandise 6800 Note payable 6800 (being issue of note on purchase of merchandise) 15-Oct Note receivable 2000 Sales revenue 2000 (being note received against the sales made) 1-Nov Cash 1860 cash discount 140 Note receivable 2000 (being getting note receivable discounting from bank) 1-Nov cash 4700 discount on note issued 300 Note payable 5000 (Being borrowed from bank on signing non-interest bearing note) 20-Nov Note receivable 4000 Sales revenue 4000 (note received for sales made) 30-Nov Note payable 6800 Interest expense 57 Cash 6857 (being payment of note payable with interest) 10-Dec Accounts payable 3000 Note Payable 3000 (being note issued against accounts payable) 16-Dec Accounests Receivable 2020 bank Charges 20 Cash 2020 Interest Revenue 20 (being note receivable discounted got dishonoured by R.Chambers) 2) adjusting Journal Entries: 31-Dec Interest expense 10 Interest payable 10 (being interest expense booked on note issued to Remak) 31-Dec Interest receivable 29 Interest revenue 29 (being interest revenue recognised on note received formRevsine)