Chapter 10-04 instructions
A business issued a 45-day, 10% note for $255,000 to a creditor on account.
Journalize the entries to record (a) the issuance of the note and (b) the payment of the note at maturity, including interest. Assume a 360-day year. Refer to the Chart of Accounts for exact wording of account titles.
CHART OF ACCOUNTS |
|
General Ledger |
| ASSETS | 110 | Cash | 111 | Accounts Receivable | 112 | Interest Receivable | 113 | Notes Receivable | 115 | Merchandise Inventory | 116 | Supplies | 118 | Prepaid Insurance | 120 | Land | 123 | Building | 124 | Accumulated Depreciation-Building | 125 | Office Equipment | 126 | Accumulated Depreciation-Office Equipment | | LIABILITIES | 210 | Accounts Payable | 213 | Interest Payable | 214 | Notes Payable | 215 | Salaries Payable | 216 | Social Security Tax Payable | 217 | Medicare Tax Payable | 218 | Employees Federal Income Tax Payable | 219 | Employees State Income Tax Payable | 221 | Retirement Savings Deductions Payable | 224 | Federal Unemployment Tax Payable | 225 | State Unemployment Tax Payable | 226 | Vacation Pay Payable | 227 | Unfunded Pension Liability | 228 | Product Warranty Payable | 229 | EPA Fines Payable | 230 | Litigation Claims Payable | | EQUITY | 310 | Common Stock | 311 | Retained Earnings | 312 | Dividends | 313 | Income Summary a. Journalize the entry to record the issuance of the note on January 1. Refer to the Chart of Accounts for exact wording of account titles. PAGE 1 JOURNAL ACCOUNTING EQUATION | DATE | DESCRIPTION | POST. REF. | DEBIT | CREDIT | ASSETS | LIABILITIES | EQUITY | 1 | | | | | | | | | 2 | | | | | | | | | b. Journalize the entry to record the payment of the note at maturity, including interest on February 15. Assume a 360-day year and round amounts to the nearest whole dollar. Refer to the Chart of Accounts for exact wording of account titles. PAGE 2 JOURNAL ACCOUNTING EQUATION | DATE | DESCRIPTION | POST. REF. | DEBIT | CREDIT | ASSETS | LIABILITIES | EQUITY | 1 | | | | | | | | | 2 | | | | | | | | | 3 | | | | | | | | | | | | REVENUE | 410 | Sales | 610 | Interest Revenue | | EXPENSES | 510 | Cost of Merchandise Sold | 520 | Salaries Expense | 524 | Depreciation Expense-Building | 525 | Delivery Expense | 526 | Repairs Expense | 529 | Selling Expenses | 531 | Rent Expense | 532 | Depreciation Expense-Office Equipment | 533 | Insurance Expense | 534 | Supplies Expense | 535 | Payroll Tax Expense | 536 | Vacation Pay Expense | 537 | Pension Expense | 538 | Cash Short and Over | 539 | Product Warranty Expense | 540 | Damage Awards and Fines | 541 | Miscellaneous Expense | 710 | Interest Expense | |