Question
At January 1, 2021, Han Merchants had a balance in the Interest Payable account for several notes it had signed and given to suppliers in
At January 1, 2021, Han Merchants had a balance in the Interest Payable account for several notes it had signed and given to suppliers in exchange for outstanding accounts payable. The following table contains the details of the notes payable and the balance of the interest accrued on each note as at the end of the last fiscal year, December 31, 2020.
Supplier | Note Principal | Interest Rate | Issue Date | Term | Interest Accrued | ||||||||||
1 | Tessier Inc. | $ 4,800 | 5% | Nov. 1, 2020 | 3 months | $ 40.00 | |||||||||
2 | Wolde Inc. | 6,900 | 4.5% | Nov. 30, 2020 | 5 months | 25.88 | |||||||||
3 | Deng Inc. | 10,200 | 6% | Dec. 1, 2020 | 1 year | 51.00 | |||||||||
Total | $ 116.88 |
All notes require that the interest be paid at the maturity of the note. All notes and interest were paid on time. Han prepares adjusting entries at the end of its calendar fiscal year. Additional transactions of 2021:
Mar. 1 | Signed a $ 11,100, one-year, 5% note to Lalonde Ltd. in settlement of an accounts payable. Interest is due at maturity. | |
Oct. 30 | Signed a $ 4,500, three-month, 4.5% note to Hanover Ltd. in settlement of an accounts payable. Interest is due at maturity. | |
Nov. 30 | Borrowed from RBC $ 10,500 cash in exchange for a two-year 6% note with interest due at maturity. |
Prepare all journal entries for Han Merchants for the above transactions and to record the on-time repayment of the notes payable that were outstanding as at December 31, 2020. (Round answers to 2 decimal places, e.g. 52.76. Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Record journal entries in the order presented in the problem.)
Date | Account Titles and Explanation | Debit | Credit |
2021 | |||
Feb. 1 | Notes Payable - LalondeNotes Payable - DengUnearned RevenueAccounts PayableNotes Payable - HanoverWarranty ExpenseCashNotes Payable - RBCInterest PayableNotes Payable - WoldeNo EntryInterest ExpenseNotes Payable - Tessier | ||
Accounts PayableUnearned RevenueNotes Payable - TessierNotes Payable - LalondeInterest ExpenseCashNo EntryNotes Payable - HanoverWarranty ExpenseNotes Payable - WoldeInterest PayableNotes Payable - DengNotes Payable - RBC | |||
Notes Payable - WoldeNotes Payable - RBCNotes Payable - DengInterest PayableCashAccounts PayableNotes Payable - TessierWarranty ExpenseNotes Payable - HanoverNo EntryNotes Payable - LalondeInterest ExpenseUnearned Revenue | |||
Unearned RevenueNotes Payable - TessierNo EntryCashInterest ExpenseNotes Payable - HanoverNotes Payable - WoldeAccounts PayableInterest PayableWarranty ExpenseNotes Payable - DengNotes Payable - RBCNotes Payable - Lalonde | |||
Feb. 1Mar. 1Apr. 30Oct. 30Nov. 30Dec. 1Dec. 31 | No EntryNotes Payable - RBCNotes Payable - TessierCashAccounts PayableNotes Payable - LalondeWarranty ExpenseInterest ExpenseUnearned RevenueNotes Payable - WoldeInterest PayableNotes Payable - HanoverNotes Payable - Deng | ||
Warranty ExpenseNo EntryNotes Payable - WoldeUnearned RevenueInterest PayableAccounts PayableNotes Payable - HanoverNotes Payable - TessierCashNotes Payable - RBCNotes Payable - DengInterest ExpenseNotes Payable - Lalonde | |||
Apr. 30 | Unearned RevenueInterest PayableNotes Payable - RBCNotes Payable - HanoverAccounts PayableCashNotes Payable - DengNotes Payable - LalondeInterest ExpenseNotes Payable - WoldeNotes Payable - TessierWarranty ExpenseNo Entry | ||
Notes Payable - HanoverCashInterest PayableNotes Payable - RBCNo EntryNotes Payable - WoldeNotes Payable - LalondeInterest ExpenseNotes Payable - DengUnearned RevenueNotes Payable - TessierWarranty ExpenseAccounts Payable | |||
Notes Payable - RBCWarranty ExpenseInterest PayableCashNo EntryInterest ExpenseNotes Payable - HanoverNotes Payable - DengNotes Payable - TessierNotes Payable - LalondeUnearned RevenueNotes Payable - WoldeAccounts Payable | |||
Warranty ExpenseNotes Payable - DengNotes Payable - TessierNotes Payable - LalondeAccounts PayableNotes Payable - WoldeNotes Payable - HanoverInterest PayableCashNo EntryNotes Payable - RBCUnearned RevenueInterest Expense | |||
Feb. 1Mar. 1Apr. 30Oct. 30Nov. 30Dec. 1Dec. 31 | Notes Payable - WoldeUnearned RevenueNotes Payable - RBCCashWarranty ExpenseNotes Payable - HanoverNotes Payable - TessierInterest ExpenseNotes Payable - DengAccounts PayableNo EntryInterest PayableNotes Payable - Lalonde | ||
No EntryAccounts PayableNotes Payable - DengInterest ExpenseWarranty ExpenseNotes Payable - TessierNotes Payable - RBCInterest PayableNotes Payable - LalondeCashNotes Payable - WoldeNotes Payable - HanoverUnearned Revenue | |||
Feb. 1Mar. 1Apr. 30Oct. 30Nov. 30Dec. 1Dec. 31 | Interest PayableNotes Payable - RBCAccounts PayableNotes Payable - TessierNotes Payable - LalondeNotes Payable - HanoverNotes Payable - DengWarranty ExpenseNo EntryCashInterest ExpenseUnearned RevenueNotes Payable - Wolde | ||
Notes Payable - DengNotes Payable - TessierInterest PayableInterest ExpenseWarranty ExpenseNotes Payable - LalondeNo EntryNotes Payable - WoldeAccounts PayableCashUnearned RevenueNotes Payable - HanoverNotes Payable - RBC | |||
Dec. 1 | Notes Payable - LalondeNotes Payable - DengInterest PayableAccounts PayableWarranty ExpenseInterest ExpenseNo EntryNotes Payable - TessierUnearned RevenueNotes Payable - RBCCashNotes Payable - WoldeNotes Payable - Hanover | ||
Notes Payable - RBCUnearned RevenueNotes Payable - HanoverNotes Payable - TessierAccounts PayableWarranty ExpenseNotes Payable - WoldeInterest PayableNotes Payable - DengInterest ExpenseNotes Payable - LalondeNo EntryCash | |||
CashInterest PayableNotes Payable - WoldeNotes Payable - DengNotes Payable - RBCAccounts PayableUnearned RevenueNotes Payable - TessierNotes Payable - HanoverNotes Payable - LalondeNo EntryInterest ExpenseWarranty Expense | |||
Unearned RevenueInterest PayableNotes Payable - WoldeNotes Payable - DengNotes Payable - RBCWarranty ExpenseInterest ExpenseNotes Payable - TessierCashNotes Payable - LalondeNotes Payable - HanoverNo EntryAccounts Payable |
eTextbook and Media
List of Accounts
Prepare any adjusting entry required on December 31, 2021. (Round answers to 2 decimal places, e.g. 52.76. Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)
Date | Account Titles and Explanation | Debit | Credit |
Dec. 31 | No EntryCashAccounts PayableWarranty ExpenseInterest ExpenseNotes Payable - RBCNotes Payable - DengUnearned RevenueNotes Payable - HanoverNotes Payable-TessierInterest PayableNotes Payable - LalondeNotes Payable - Wolde | ||
Notes Payable - DengUnearned RevenueNotes Payable - LalondeCashAccounts PayableNo EntryInterest PayableNotes Payable - WoldeWarranty ExpenseNotes Payable - RBCNotes Payable - HanoverInterest ExpenseNotes Payable-Tessier |
eTextbook and Media
List of Accounts
What amount will appear under interest expense for Hans income statement for the year ended December 31, 2021? Where will this amount be classified on the income statement? (Round answer to 2 decimal places, e.g. 52.76.)
Income Statement Classification | Amount | |||
Interest expense | Other ExpensesRevenuesOperating Expenses | $ |
eTextbook and Media
List of Accounts
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