Question
The January 1, Year 1 trial balance for the Brown Company is found on the trial balance tab. The beginning balances are assumed. Griffin Co.
The January 1, Year 1 trial balance for the Brown Company is found on the trial balance tab. The beginning balances are assumed. Griffin Co. entered into the following transactions involving short-term liabilities. (Use 360 days a year.)
Year 1 | ||||
Apr. | 20 | Purchased $40,750 of merchandise on credit from Martin, terms n/30. | ||
May | 19 | Replaced the April 20 account payable to Martin with a 90-day, 8%, $36,000 note payable along with paying $4,750 in cash. | ||
July | 8 | Borrowed $84,000 cash from CDR Bank by signing a 120-day, 12%, $84,000 note payable. | ||
Aug. | 17 | Paid the amount due on the note to Martin at the maturity date. | ||
Nov. | 5 | Paid the amount due on the note to CDR Bank at the maturity date. | ||
Nov. | 28 | Borrowed $45,000 cash from Chicago Bank by signing a 60-day, 12%, $45,000 note payable. | ||
Dec. | 31 | Recorded an adjusting entry for accrued interest on the note to Chicago Bank. | ||
Year 2 | ||||
Jan. | 27 | Paid the amount due on the note to Chicago Bank at the maturity date. |
Prepare the journal entries related to notes and accounts payable. Hint: Use the "Calculation of Interest" tab to ensure the accuracy of your entries.
Enter the principal amount, interest rate, and number of days of interest to be recorded for each note. Verify that interest expense agrees with your journal entries and the trial balance.
Prepare the January 27, Year 2 journal entry to record the payment of the Chicago note at maturity. Brown Company does NOT prepare reversing entries.
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