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Digiron [165]
3 years ago
12

On May 1 comma 2019​, Jasper Company purchased inventory costing $ 87 comma 000 by signing a 10​%, ​nine-month, short-term note

payable. Jasper will pay the entire note​ (principal and​ interest) on the​ note's maturity date. Journalize the​ company's (a) purchase of​ inventory; and​ (b) accrual of interest on the note payable on November 31 comma 2019. ​(Record debits​ first, then credits. Exclude explanations from any journal​ entries.)
Business
1 answer:
RSB [31]3 years ago
7 0

Answer:

The Journal entries are as follows:

(i) On May 1, 2019

Inventory A/c     Dr. $87,000

To Notes payable                    $87,000

(To record purchase of inventory)

(ii) On Nov 31, 2019

Interest Expense A/c      Dr. $5,075

To Interest payable                            $5,075

(To record the Accrued the interest.)              

Workings:

May to Nov = 7 months

Therefore,

Interest Expense = 87,000 × 10% × 7÷12

                             = $5,075

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