Eddie Edwards and Phil Bell own and operate The Second Hand Equipment Shop. The following transactions involving notes and interest were completed during the last three months of 20--:

Oct.	1	Issued a $6,800, 60-day, 5% note to Mac Farm Equipment for purchase of merchandise.
	15	Received a $2,000, 60-day, 6% note from R. Chambers in payment for sale of merchandise.
Nov.	1	Discounted the note received from R. Chambers on October 15 at Merchants National Bank. The discount rate is 7%.
	1	Borrowed $5,000 from First National Bank on a three-month, non-interest-bearing note that was discounted at 6%.
	20	Received a $4,000, 90-day, 6.5% note from L. Revsine in payment of an account receivable.
	30	Issued a check to Mac Farm Equipment in payment of the note issued on October 1, including interest.
Dec.	10	Issued a $3,000, 90-day, 6% note to Remak Tractors to extend time for payment of an account payable.
	16	Received notification from Merchants National Bank that R. Chambers has dishonored his note. A check is issued to cover the note plus a $20 bank fee that must be paid to the bank.

Required:

1.	Prepare general journal entries for the transactions.
2.	Prepare necessary adjusting entries for the notes outstanding on December 31.

CHART OF ACCOUNTSThe Second Hand Equipment ShopGeneral Ledger

	ASSETS
101	Cash
121	Notes Receivable
122	Accounts Receivable
123	Accrued Interest Receivable
141	Supplies
145	Prepaid Insurance
181	Equipment
181.1	Accumulated Depreciation-Equipment

	LIABILITIES
201	Notes Payable
201.1	Discount on Notes Payable
202	Accounts Payable
207	Accrued Interest Payable
219	Wages Payable
231	Sales Tax Payable

	EQUITY
311	Owner, Capital
312	Owner, Drawing

	REVENUE
401	Sales
411	Interest Revenue

	EXPENSES
501	Purchases
511	Wages Expense
512	Advertising Expense
521	Rent Expense
523	Supplies Expense
525	Phone Expense
532	Bad Debt Expense
535	Insurance Expense
541	Depreciation Expense-Equipment
549	Miscellaneous Expense
551	Interest Expense

Subsidiary Ledgers

	Accounts Receivable Ledger
122.1	L. Revsine
122.2	R. Chambers

	Accounts Payable Ledger
202.1	Remak Tractors
202.2	Mac Farm Equipment

1. Prepare general journal entries for the transactions.
	2. Prepare necessary adjusting entries for the notes outstanding on December 31.
	Assume a 360 day year for interest calculations.

General Journal Instructions

PAGE 1

GENERAL JOURNAL

	DATE	ACCOUNT TITLE	POST. REF.	DEBIT	CREDIT
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20		Adjusting Entries
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