Question

Record the following note payable transactions of the Kettle Company in the company’s general journal. Explanations are not required.

2019

May 1              Purchased equipment costing $28,000 by issuing a one-year, 4% note payable.

Dec 31             Accrued interest on the note payable.

2020

May 1              Paid the note payable at maturity

Answer 1

Journal Entries
Date	Accounts	Debit	Credit
May. 1	Equipment	$28,000
	Notes Payable		$28,000
	(To record the purchase of equipment by issuing 4% note)
Dec. 31	Interest Expense ($28,000*4/100*8/12 months)	$747
	Interest Payable		$747
	(To record the interest accrued on the note payable)
May. 1	Notes Payable	$28,000
	Interest Expense ($28,000*4/100*4/12 months)	$373
	Interest Payable	$747
	Cash ($28,000 + $373 +$747)		$29,120
	(To record the payment of note at maturity)