Answer:
Explanation:
The journal entries are shown below:
On November 1
Cash A/c Dr $34,800
To Notes payable A/c $34,800
(Being issuance of the note payable is recorded)
On December 31
Interest expense A/c Dr $522
To Interest payable A/c $522
(Being accrued interest adjusted)
The computation is shown below:
Principal × rate of interest × number of months ÷ (total number of months in a year)
= $34,800 × 9% × (2 months ÷ 12 months)
= $522
The two month is calculated from the November 1 to December 31
On February 1
Interest Expense A/c Dr $261
Interest payable A/c Dr $522
Note Payable A/c Dr $34,800
To Cash A/c $35583
(Being payment is recorded)
The computation is shown below:
Principal × rate of interest × number of months ÷ (total number of months in a year)
= $34,800 × 9% × (1 months ÷ 12 months)
= $261
The one month is calculated from the January 1 to February 1
