(3) An entry was made incorrectly recording the Note payable interest and principal payments to the other accrued liability account. The entry should have been made to the interest expense and the notes payable accounts. The loan has a monthly payment of $1001.61. The shop has paid $2,439 in interest and $5,565 in principal over the past eight months.

(a)The note was used to purchase a customer list. ($10,000). The asset will have a life of 10 years, and it should be amortized evenly over the 10-year peroid. You'll need to record the amortization.

(b) The loan has a monthly payment of $1,001.61. The short-term portion of the loan (next 12 months of payments) need to be reclassed from account note payable to short term portion of notes payable)

(c) As stated above, the original interest expense of $2,439 was incorrectly recorded in the other accrued liabilities account for the eight month peroid. You'll need to make an adjusting journal entry to correct this. You'll need to reclassify the error to the interest expense account

(D) The principal amount of $5,565 was also incorrectly recorded in other accrued liabilities account. You'll need to make an adjusting entry, moving this from accrued other and reducing the long-term note payable account