Refer to the information provided in E3-9 for Aubergine Co. and Chartreuse Company. Chartreuse has a November 30 fiscal year end and prepares adjusting entries on an annual basis.

Instructions

Prepare all necessary journal entries for Chartreuse in 2014 and 2015 regarding the notes and interest, including adjusting entries. Prepare separate adjusting entries for each note.

Data from E3-9

During 2014, Aubergine Co. borrowed cash from Chartreuse Company by issuing notes payable as follows:

1. July 1, 2014, issued an eight-month, 4% note for $75,000. Interest and principal are payable at maturity.

2. November 1, 2014, issued a three-month, 5% note for $42,000. Interest is payable monthly on the first day of the month. Principal is payable at maturity.

Aubergine has a December 31 fi scal year end and prepares adjusting entries on an annual basis.