Question

On November 1, 2018, Aviation Training Corp. borrows $40,000 cash from Community Savings and Loan. Aviation Training signs a three-month, 6% note payable. Interest is payable at maturity. Aviation’s year-end is December 31.

Required:

1., 2. & 3. Record the necessary entries in the Journal Entry Worksheet below. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Answer 1

Journal Entries:
Date	Accounts title and explanation				Debit $	Credit $
1-Nov	Cash account Dr.				40000
	Notes payable Account					40000
31-Dec	Interest expense Account Dr.				400
	Interest payable account (40000*6%*2/12)					400
1-Feb	Notes payable Dr.				40000
	Interest payable Account Dr.				400
	Interest expense Account Dr. (40000*6%*1/12)				200
	Cash account					40600