Prepare journal entries for the transactions noted above Sheffield Corporation s
ID: 2568730 • Letter: P
Question
Prepare journal entries for the transactions noted above
Sheffield Corporation sells rock-climbing products and also operates an indoor climbing facility for climbing enthusiasts. During the last part of 2017, Sheffield had the following transactions related to notes payable.Sept. 1 Issued a $16,800 note to Pippen to purchase inventory. The 3-month note payable bears interest of 6% and is due December 1. (Sheffield uses a perpetual inventory system.) Sept. 30 Recorded accrued interest for the Pippen note. Oct. 1 Issued a $21,600, 8%, 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 $27,600 note and paid $9,200 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 7% 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.
Explanation / Answer
Prepare journal entries for the transactions noted above
Date accounts & explanation debit credit sept 1 Inventory a/c 16800 Notes payable a/c 16800 (To record note issued on purchase inventory) Sep 30 Interest expenses a/c (16800*6%*1/12) 84 Interest payable a/c 84 (To record accured interest) Oct 1 Cash a/c 21600 Notes payable a/c 21600 (To record notes issued on finance from bank) Oct 31 Interest expenses a/c (21600*8%*1/12+84) 228 Interest payable a/c 228 (TO record accured interest) Nov 1 Vehicle a/c 36800 Cash a/c 9200 Notes payable a/c 27600 (To record purchase of vehicle) Nov 30 Interest expenses a/c (27600*7%*1/12+228) 389 Interest payable a/c 389 (To record accured interest) Dec 1 Notes payable a/c 16800 Interest payable a/c 252 Cash a/c 17052 (To record paid interest and notes) Dec 31 Interest expenses a/c (21600*8%*1/12+27600*7%*1/12) 305 Interest payable a/c 305 (To record accured interest)