INTEREST-BEARING NOTE REPLACING AN UNPAID ACCOUNT PAYABLE Monte Cristo Products owed $100,000 on account for inventory purchased
Question:
INTEREST-BEARING NOTE REPLACING AN UNPAID ACCOUNT PAYABLE Monte Cristo Products owed $100,000 on account for inventory purchased on November 1, 2010. Monte Cristo’s fiscal year ends on December 31.
Monte Cristo was unable to pay the amount owed by the January 31 due date because of financial difficulties.
On February 1, 2011, Monte Cristo signed a $100,000, 12 percent interest-bearing note. This note was repaid with interest on August 31, 2011.
Required:
. Prepare the entry recorded on November 1, 2010.
. Prepare the adjusting entry recorded on December 31, 2010.
. Prepare the entry recorded on February 1, 2011.
. Prepare the entry recorded on August 31, 2011.
Step by Step Answer:
Cornerstones Of Financial Accounting Current Trends Update
ISBN: 9781111527952
1st Edition
Authors: Jay Rich , Jeff Jones, Maryanne Mowen , Don Hansen