Question

Entries for notes payable

Bennett Enterprises issues a $912,000, 30-day, 8%, note to Spectrum Industries for merchandise inventory.

Assume a 360-day year. If required, round your answers to the nearest dollar. For a compound transaction, if an amount box does not require an entry, leave it blank.

a. Journalize Bennett Enterprises’ entries to record:

the issuance of the note.

the payment of the note at maturity.

1.
2.

b. Journalize Spectrum Industries’ entries to record:

the receipt of the note.

the receipt of the payment of the note at maturity.

1.
2.

Answer 1

A)
1	the issuance of the note
		Debit	Credit
	Accounts payable	$ 912,000.00
	Notes payable		$ 912,000.00
2	the payment of the note at maturity.
	Notes payable	$ 912,000.00
	Interest expense ($912,000 x 8% x 30/360)	$      6,080.00
	Cash		$ 918,080.00

B)
1	the receipt of the note.
		Debit	Credit
	Notes Receivable	$ 912,000.00
	Sales/ Accounts Receivable		$ 912,000.00
2	the receipt of the payment of the note at maturity.
	Cash	$ 918,080.00
	Notes Receivable		$ 912,000.00
	Interest Revenue ($912,000 x 8% x 30/360)		$      6,080.00