Answer:
Explanation:
The journal entries are shown below:
(A) Cash A/c Dr $48,000
To Notes payable A/c $48,000
(Being note is issued for cash)
(B) Interest expense A/c Dr $480
To Interest payable A/c $480
(Being accrued interest adjusted)
The computation is shown below:
= Principal × rate of interest × number of months ÷ (total number of months in a year)
= $48,000 × 6% × (2 months ÷ 12 months)
= $480
The 2 months is calculated from November 1 to December 31
(C) Interest expense A/c Dr $240
Interest payable A/c Dr $480
Notes payable A/c Dr $48,000
To Cash A/c $48,720
(Being cash is paid on maturity)
The computation is shown below:
= Principal × rate of interest × number of months ÷ (total number of months in a year)
= $48,000 × 6% × (1 months ÷ 12 months)
= $480
The 1 months is calculated from December 31 to January 31
