Answer:
C.S. Sandhill Company
Journal Entries:
July 1, 2022
Debit Cash $62,000
Credit 9-month, 8% Notes Payable (First National Bank) $62,000
To record signing of a 9-month 8% notes payable for cash borrowed.
Nov. 1, 2022
Debit Cash $65,000
Credit 3-month, 6% Notes Payable (Lyon County State Bank) $65,000
To record the signing of a 3-month 6% notes payable for cash borrowed.
Dec. 31, 2022
Debit Interest Expense $3,130
Credit Interest Payable $3,130
To record interest expense for the two notes. See calculations below.
Feb. 1, 2023
Debit 3-month, 6% Notes Payable (Lyon County State Bank) $65,000
Debit Interest Payable $650
Debit Interest Expense $325
Credit Cash $65,975
To record the repayment of the notes payable with interest due.
Apr. 1, 2023
Debit 9-month, 8% Notes Payable (First National Bank) $62,000
Debit Interest Payable $2,480
Debit Interest Expense $1,240
Credit Cash $65,720
To record the repayment of the notes payable with interest due.
Explanation:
a) Data and Analysis:
July 1, 2022 Cash $62,000 9-month, 8% Notes Payable (First National Bank) $62,000
Nov. 1, 2022 Cash $65,000 3-month, 6% Notes Payable (Lyon County State Bank) $65,000
Dec. 31, 2022 Interest Expense $3,130 Interest Payable $3,130 ($62,000 * 8% * 6/12) + ($65,000 * 6% * 2/12)
Feb. 1, 2023 3-month, 6% Notes Payable (Lyon County State Bank) $65,000 Interest Payable $650 Interest Expense $325 Cash $65,975 (Interest expense = $325 ($65,000 * 6% * 1/12)
Apr. 1, 2023 9-month, 8% Notes Payable (First National Bank) $62,000 Interest Payable $2,480 Interest Expense $1,240 Cash $65,720 (Interest expense = $1,240 ($62,000 * 8% * 3/12)
