Instructions

A business issued a 45-day, 4% note for $275,000 to a creditor on account.

Journalize the entries to record

(a) the issuance of the note on January 1 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 110Cash 111Accounts Receivable 112Interest Receivable 113Notes Receivable 115Merchandise Inventory 116Supplies 118Prepaid Insurance 120Land 123Building 124Accumulated Depreciation-Building 125Office Equipment 126Accumulated Depreciation-Office Equipment

LIABILITIES 210Accounts Payable 213Interest Payable 214Notes Payable 215Salaries Payable 216Social Security Tax Payable 217Medicare Tax Payable 218Employees Federal Income Tax Payable 219Employees State Income Tax Payable 221Retirement Savings Deductions Payable 224Federal Unemployment Tax Payable 225State Unemployment Tax Payable 226Vacation Pay Payable 227Unfunded Pension Liability 228Product Warranty Payable 229EPA Fines Payable 230Litigation Claims Payable

EQUITY 310Owner, Capital 311Owner, Drawing 312Income Summary

REVENUE 410Sales 610Interest Revenue

a. Journalize the entries to record the issuance of the note on January 1. Refer to the Chart of Accounts for exact wording of account titles.

JOURNAL

DATE DESCRIPTION DEBIT CREDIT

b. Journalize the entries to record the payment of the note at maturity, including interest. 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.

JOURNAL

DATE DESCRIPTION DEBIT CREDIT