A business issued a 30-day, 7% note for $150,000 to a creditor on account. Journalize the entries to record (a) the issuance of the note

A business issued a 30-day, 7% note for $150,000 to a creditor on account. Journalize the entries to record (a) the issuance of the note and (b) the payment of the note at maturity, including interest.


Answer:









a.
 Accounts Payable 150,000
Notes Payable 150,000
b.
 Notes Payable 150,000
Interest Expense* 875
Cash 150,875
* $150,000 × 7% × 30/360


A business issued a 45-day note for $90,000 to a creditor on account. The note was discounted at 8%. Journalize the entries to record (a) the issuance of the note and (b) the payment of the note at maturity.


Answer:










a.
 Accounts Payable 89,100
Interest Expense* 900
Notes Payable 90,000
b.
 Notes Payable 90,000
Cash 90,000
 $90,000 × 8% × 45/360