Answer:
Sarasota Corporation
Journal Entries for the following dates:
Oct. 1: Debit Equipment $22,800
Credit 10% Notes Payable (Prime Bank) $22,800
To record the issuance of a 4-month note.
Nov. 1: Debit Vehicle $35,700
Credit Cash $8,100
Credit 6% Notes Payable $27,600
To record the issuance of a 12-month note and cash for purchased vehicle.
Nov. 30: Debit Interest Expense $454
Credit Interest payable $454
To accrue the interests due on the notes.
Dec. 31: Debit Interest Expense $328
Credit Interest payable $328
To accrue the interests due on the outstanding notes.
Explanation:
a) Data and Analysis:
Sept. 1: Inventory $16,800 9% Notes Payable (Pippen) $16,800
3-month note
Sept. 30: Interest Expense $126 Interest payable $126
Oct. 1: Equipment $22,800 10% Notes Payable (Prime Bank) $22,800
4-month note
Oct. 31: Interest Expense $316 Interest payable 316
Nov. 1: Vehicle $35,700 Cash $8,100 6% Notes Payable $27,600
12-month note
Nov. 30: Interest Expense $454 Interest payable $454
Dec. 1: Notes payable (Pippen) $16,800 Interest payable $378 Cash $17,178
Dec. 31: Interest Expense $328 Interest payable $328
