Question

Entries for notes payable

Bull City Industries is considering issuing a $100,000, 7% note to a creditor on account.

Assume a 360-day year. For a compound transaction, if an amount box does not require an entry, leave it blank.

b. If the note is issued with a 90-day term, journalize the entries to record:

1. the issuance of the note.
2. the payment of the note at maturity.

1.

Accounts Payable

Answer 1

Ans;

Face Value of Note : $100,000

Interest rate : 7%

Note Period : 90 days

Interest on Note : $100,000 * 7% * 90/360 = $1,750

Requried Journal entries:

S No.	Account Title	Debit	Credit
1.	Account Payable	$100,000
	Note Payable (To record the issue of Note in lieu of account payable)		$100,000
2.	Note Payable	$100,000
	Interest on Note Payable	$1,750
	Cash (To record the payment of note on maturity)		$101,750

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answered by: anonymous