Answer:
Explanation:
The journal entries are shown below:
1. Cash A/c Dr $476,000
Finance Charges A/c $24,000 ($800,000 × 3%)
To Notes Payable A/c $500,000
(Being the notes payable is recorded)
2. Cash A/c Dr $750,000
To Accounts Receivable $750,000
(Being cash is collected)
3. Notes Payable A/c Dr $500,000
Interest Expenses A/c Dr $3,750
To Cash A/c Dr $503,750
The interest expense is computed below
= Principal × rate of interest × number of months ÷ (total number of months in a year)
= $500,000 × 9% × (1 months ÷ 12 months)
= $3,750
The 1 month is calculated from the March 1 to April 1
