Question
Adjusting Entries for Interest At December 31, 2011, Portland Corporation had two notes payable outstanding (notes 1 and 2). At December 31, 2012, Portland also
Adjusting Entries for Interest At December 31, 2011, Portland Corporation had two notes payable outstanding (notes 1 and 2). At December 31, 2012, Portland also had two notes payable outstanding (notes 3 and 4). These notes are described below.
| Date of note | Principal Amount | Interest Rate | Number of Days | |
|---|---|---|---|---|
| December 31, 2011 | ||||
| Note 1 | November 25, 2011 | $28,000 | 8% | 90 |
| Note 2 | December 16, 2011 | 17,800 | 9% | 60 |
| December 31, 2012 | ||||
| Note 3 | December 11, 2012 | 16,400 | 9% | 120 |
| Note 4 | December 07, 2012 | 19,000 | 10% | 90 |
Required a. Prepare the adjusting entries for interest at December 31, 2011. b. Assume that the adjusting entries were made at December 31, 2011, and that no adjusting entries were made during 2012. Prepare the 2012 journal entries to record payment of the notes that were outstanding at December 31, 2011. c. Prepare the adjusting entries for interest at December 31, 2012. Round answers to nearest dollar. Use 360 days for interest calculations when applicable.
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