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3 years ago

Consider the following note payable transactions of Cabal Video Productions.

Business

1 answer:

Whitepunk [10]3 years ago

5 0

Answer:

1. The Journal entries are as follows:

(a) On May 1, 2018

Equipment A/c Dr. $96,000

To Notes payable $96,000

(To record the Issuance of Note Payable)

(b) On December 31, 2018

Interest expense A/c Dr. $3,840

To interest payable $3,840

(To record the accrue interest at the end of the year)

Time period: May 1, 2018 to December 31, 2018 = 8 months

Interest expense:

= $96,000 × 0.06 × (8/12)

= $3,840

Notes payable A/c Dr. $12,000

Interest payable A/c Dr. $3,840

Interest expense A/c Dr. $1,920

To cash $17,760

(To record the first installment on notes payable)

Time period: January 1, 2019 to April 30, 2019 = 4 months

Interest expense:

= $96,000 × 0.06 × (4/12)

= $1,920

(d) On December 31, 2019

Interest expense A/c Dr. $3,360

To interest payable $3,360

(To record the accrue interest at the end of the year)

Time period: May 1, 2019 to December 31, 2019 = 8 months

Interest expense:

= ($96,000 - $12,000) × 0.06 × (8/12)

= $84,000 × 0.06 × (8/12)

= $3,360

2. Liability at December 31, 2019:

= $3,360

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Explanation:

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1 year ago

What will happen to the trade balance and the real exchange rate of a small open economy when government purchases increase, as

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3 years ago

Suppose the government enacts a price floor on milk, which leads to a surplus in the market. How will the government then attemp

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Answer:

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Explanation:

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3 years ago

Adams Company has employed a bookkeeper who is inexperienced. On December 28, after reviewing the records for the year, you disc

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Answer:

Debit Credit

Trade payable $300

Cash $300

Explanation:

First we have to reverse the wrong journal entry which has been made by the inexperienced bookkeeper in the Adams Company accounts:

Debit Credit

Trade payable $300

Cash $300

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Debit Credit

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3 years ago

Read 2 more answers