Answer:
Ehler Corporation
a) Journal Entries:
Sept. 1  Debit Inventory $12,000
Credit 6%, 3-month Notes Payable (Pippen) $12,000) 
To record issuance of note to purchase inventory.
Sept.  30 Debit Interest expense $60
Credit Interest Payable $60
To accrue interest expense ($12,000 * 6% * 1/12).
Oct.  1 Debit Climbing Wall $16,500 
Credit 8%, 4-month Note Payable (Prime Bank) $16,500
To record issuance of note payable to purchase climbing wall.
Oct.  31 Debit Interest expense $170
Credit Interest payable $170
To accrue interest expense ($60 + $16,500 * 8% * 1/12).
Nov.  1 Debit Vehicle $26,000 
Credit Cash $8,000
Credit 6%, 12-month Note Payable $18,000
To record the purchase of a new vehicle for climbers.
Nov.  30 Debit Interest expense $260
Credit Interest payable $260
To accrue interest expense ($170 + $18,000 * 6% * 1/12).
Dec.  1 Debit 6% Notes Payable (Pippen) $12,000)
Debit Interest payable $180
Credit Cash $12,180
To record the payment of principal and interests.
Dec.  31 Debit Interest expense $200
Credit Interest payable $200
To accrue interest expense ($110 + $90)
b) T-accounts:
Notes Payable
Date      Account Titles            Debit      Credit
Sept. 1    Inventory                                 $12,000 
Oct.  1    Climbing Wall                             16,500
Nov.  1    Vehicle                                      18,000
Dec.  1    Cash                       $12,000
Dec. 31  Balance                   34,500
Interest Payable
Date       Account Titles            Debit      Credit
Sept.  30 Interest expense                          $60
Oct.  31    Interest expense                           170
Nov.  30  Interest expense                          260
Dec.  1     Cash                            $180
Dec.  31   Interest expense                         200
Dec. 31   Balance                       $510
Interest Expense
Date       Account Titles            Debit      Credit
Sept.  30 Interest payable           $60
Oct.  31    Interest payable            170
Nov.  30  Interest payable           260
Dec.  31   Interest payable           200
Dec. 31   Income summary                     $690
c) Balance Sheet:
Current liabilities:
Interest payable          $510
Notes payable       $34,500
d) Total interest expense = $690
Explanation:
a) Data and Analysis:
Sept. 1  Inventory $12,000 6% Notes Payable (Pippen) $12,000) to purchase inventory. The 3-month note payable
Sept.  30 Interest expense $60 Interest payable $60 ($12,000 * 6% * 1/12)
Oct.  1 Climbing Wall $16,500 8%, 4-month Note Payable (Prime Bank) $16,500
Oct.  31 Interest expense $170 Interest payable $170 ($60 + $16,500 * 8% * 1/12)
Nov.  1 Vehicle $26,000 Cash $8,000 6%, 12-month Note Payable $18,000
Nov.  30 Interest expense $260 Interest payable $260 ($170 + $18,000 * 6% * 1/12)
Dec.  1 6% Notes Payable (Pippen) $12,000) Interest payable $180 Cash $12,180
Dec.  31 Interest expense $200 Interest payable $200