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--:

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.

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. Discounted the note received from R. Chambers on October 15 at Merchants National Bank. The discount rate Nov. 1 is 7%. Borrowed $5,000 from First National Bank on a three-month, non-interestbearing note that was discounted at 1 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. Received notification from Merchants National Bank that R. Chambers has dishonored his note. A check is 16 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 ACCOUNTS The Second Hand Equipment Shop General Ledger ASSETS 101 Cash 121 Notes Receivable REVENUE 122 Accounts Receivable 401 Sales 123 Accrued Interest Receivable 411 Interest Revenue 141 Supplies 145 Prepaid Insurance EXPENSES 181 Equipment 501 Purchases 181.1 Accumulated Depreciation-Equipment 511 Wages Expense 512 Advertising Expense LIABILITIES 521 Rent Expense 201 Notes Payable 523 Supplies Expense 201.1 Discount on Notes Payable 525 Phone Expense 202 Accounts Payable 532 Bad Debt Expense 207 Accrued Interest Payable 535 Insurance Expense 219 Wages Payable 541 Depreciation Expense-Equipment 231 Sales Tax Payable 549 Miscellaneous Expense EQUITY 551 Interest Expense 311 Capital 312 Drawing 313 Income Summary Subsidiary Ledgers Accounts Receivable Ledger Accounts Payable Ledger 122.1 L. Revsine 202.1 Remak Tractors 122.2 R. Chambers 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. ___________________________________________________________________________________ **Refer to the chart of accounts for the exact wording of the account titles. If Accounts Receivable or Accounts Payable is used, add a slash (/) followed by the customer name or supplier name: Accounts Receivable/Customer or Accounts Payable/Supplier. Refer to the Chart of Accounts (Subsidiary Ledgers) for the exact wording of customer and supplier names. CNOW journals do not use lines for spaces or journal explanations. Every line on a journal page is used for debit or credit entries. Do not add explanations or skip a line between journal entries. CNOW journals will automatically indent a credit entry when a credit amount is entered. GENERAL JOURNAL** DATE ACCOUNT TITLE 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Adjusting Entries 21 22 23 24 25 26 POST. REF. DEBIT CREDIT