Reversing entries eliminate the balance of an asset or liability created by an adjusting entry. Unlike the Appliance Center's accounting procedures illustrated in this chapter, Baird Company has elected not to record reversing entries. Instead, Baird’s accounting personnel must assign different accounts and amounts to subsequent transactions to correctly eliminate the asset or liability account balances.

The following transactions occurred related to a note payable.

Instructions:
1. Journalize the transactions and record them in T accounts. Record the first three transactions correctly.
Record the April 30 transaction, assuming that an accounting clerk fails to recognize that the transaction relates to a December 31 adjusting entry. Describe the-error resulting from the accounting clerk's failure.
2. Create another set of T accounts and journalize the transactions again. Determine the correct accounts and amounts for the April 30 transaction to ensure that the final account balances are correct.

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Transactions: Nov. 1, 20X1. Signed a 180-day, 12% note payable with First National Bank for $10,000.00. R142. Dec. 31, 20X1. Accrued interest expense. Dec. 31, 20X1. Closed the interest expense account. Apr. 30, 20X2. Paid the maturity value of the First National Bank note. C154.