Question

On december 1, 2016, escobar consulting, which uses a calendar year as its fiscal year, signs a $4,000, 12%, four-month note payable. journalize the entry to record the payment of the note and entire interest on april 1, 2017.

Answer 1

The journal entry to record the payment of the note and entire interest on april 1, 2017 is as follows; Debit Notes Payable $4,000, Debit Interest Expense 120, Debit Interest Payable 40, Credit Cash $4,160.

April 1,2017
       Notes payable     $4,000
       Interest expense    $120
       Interest payable       $40
                       Cash                  $4,160