Your supervisor has asked you to audit some journal entries recorded by her client€™s bookkeeper on the following page. Review the following transactions. If there is an error, rejournalize the entry. If the bookkeeper€™s entry is correct, write OK next to the date on your paper. The fiscal period begins January 1 and ends December 31.

Apr. 4 Borrowed $ 3,500 from Stanford Bank for 90 days, discount rate 6 percent. Signed a discounted note for $ 3,500, dated April 4.
June 30 Bought a new air conditioning system (Building), giving a 90-day, 6.5 percent note, dated June 30, to Young Company, $ 55,300.
July 3 Paid the $ 3,500 note to Stanford Bank dated April 4.
Sept. 28 Paid the entire interest due to Young Company as well as $ 25,300 toward the principal. Issued a new $ 30,000, 120-day, 6.5 percent note, dated September 28.
Dec. 31 Journalized the adjusting entries for the outstanding notes owed to YoungCompany.

Transcribed Image Text:

GENERAL JOURNAL Page Post Ref Debit Date 20- Apr Cash Description Credit 3 5 0 0 00 Interest Expense Notes Payable 5 2 50 3 4 47 50 June 30 Building 55 3 0 0 00 Notes Payable 55 3 00 00 July 3 Notes Payable 3 5 0 0 00 5 2 50 Interest Expense Cash 3 5 5 2 50 Sept 28 Cash 25 3 00 00 Notes Payable 25 3 0 0 00 28 Notes Payable 30 0 00 Notes Payable 30 00 0 00 Adjusting Entries Dec. 31 Interest Expense 5 7 3 63 Interest Payabla 5 7 3 63