I've answered some...am I correct? And, how do I do the final one?
Mikor has an account payable of $7,700 due to Smiley, Inc., one of its suppliers. The amount was due to be paid on October 15, 2016. Mikor only had enough cash on hand then to pay $1,700 of the amount due, so Mikor's treasurer called Smiley's treasurer and agreed to sign a note payable for the balance. The note was dated October 15, 2016, had an interest rate of 8% per annum, and was payable with interest on December 31, 2016.
Use the horizontal model, or write the journal entry, to show the effect of:
a. The October 15, 2016 payment of $1,700 and the creation of a note payable for the balance owed.
October 15, 2016 Dr. Supplies expense ………… 1700
Cr. Supplies …………………..1700
Note payable issued for balance 6000
b. The October 31, 2016 accrual of interest expense for the month of October.
October 31, 2016 Dr. Interest receivable …….21.04
Cr. Interest Income ………………21.04
c. The December 31, 2016 payment of the note and all of the interest due. Interest forNovember and December had not been accrued.
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