Answer:
1. How much interest expense must be accrued at December 31, 2016? $1,710
2. Determine the amount of Cram Sales' final payment on July 1, 2017.
$60,420
3. How much interest expense will Cram Sales report for 2016 and for 2017?
interest expense 2016 = $1,710
interest expense 2017 = $1,710
Explanation:
July 1 Purchased delivery truck costing $57,000 by issuing a one-year, 6% note payable.
Dr Vehicles 57,000
Cr Notes payable 57,000
Dec 31 Accrued interest on the note payable. 2017
Dr Interest expense 1,710
Cr Interest payable 1,710
Jul 1 Paid the note payable at maturity.
Dr Notes payable 57,000
Dr Interest payable 1,710
Dr Interest expense 1,710
Cr Cash 60,420
