Answered: Journal Entries for Accounts and Notes…

Century 21 Accounting General Journal

11th Edition

ISBN:9781337680059

Author:Gilbertson

Publisher:Gilbertson

Chapter14: Accounting For Uncollectible Accounts Receivable

Section: Chapter Questions

Problem 3AP

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Journal Entries for Accounts and Notes Payable
Logan Company had the following transactions:

Apr.	8	Issued a $5,000, 60-day, six percent note payable in payment of an account with Bennett Company.
May	15	Borrowed $40,000 from Lincoln Bank, signing a 60-day note at nine percent.
Jun.	7	Paid Bennett Company the principal and interest due on the April 8 note payable.
Jul.	6	Purchased $12,000 of merchandise from Bolton Company; signed a 90-day note with ten percent interest.
Jul.	14	Paid the May 15 note due Lincoln Bank.
Oct.	2	Borrowed $30,000 from Lincoln Bank, signing a 120-day note at 12 percent.
Oct.	4	Defaulted on the note payable to Bolton Company.

Required

a. Record these transactions in general journal form.
b. Record any adjusting entries for interest in general journal form. Logan Company has a December 31 year-end.

Round answers to nearest dollar. Use 360 days for interest calculations.

a.

General Journal
Date	Description	Debit	Credit
Apr.8

	Issued a 60-day, 6 percent note payable in payment of an account payable.
May 15

	Borrowed from bank for 60 days at 9 percent.
Jun.7
	Interest Expense

	Paid note payable to Bennett Company.
Jul.6

	Purchased merchandise and issued a note payablewith interest at 10 percent for 90 days.
Jul.14
	Interest Expense

	Paid note payable to Lincoln Bank.
Oct.2

	Borrowed from bank for 120 days at 12 percent.
Oct.4
	Interest Expense

	Defaulted on note payable.

General Journal
Date	Description	Debit	Credit
Dec.31

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