Question

14.

On November 1, 2018, Aviation Training Corp. borrows $45,000 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.)

Journal entry worksheet

-Record the issuance of note.

-Record the adjustment for interest.

-Record the repayment of the note at maturity.

Answer 1

Solution:

-Record the issuance of note.

Date	General Journal	Debit	Credit
Nov.1,2018	Cash	$45,000
	Notes Payable		$45,000

-Record the adjustment for interest.

Date	General Journal	Debit	Credit
Dec.31, 2018	Interest Expense ($45,000*2 months /12 * 6%)	$450
	Interest Payable		$450

-Record the repayment of the note at maturity.

Date	General Journal	Debit	Credit
At maturity	Interest Expense ($45,000*1 months /12 * 6%)	$225
	Interest Payable	$450
	Notes Payable	$45,000
	Cash		$45,675

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