A business issued a 90day 15 note for 91000 to a creditor on

A business issued a 90-day, 15% note for $91,000 to a creditor on account. Journalize the entries to record (a) the issuance of the note and (b) the payment of the note at maturity, including interest. Assume a 360-day year.

A business issued a 90-day, 15% note for $91,000 to a creditor on account. Journalize the entries to record (a) the issuance of the note and (b) the payment of the note at maturity, including interest.Assume a 360-day year. If an amount box does not require an entry, leave it blank. Accounts Payable v 91,000 a. Notes Payable 91,000 b. Notes Payable 91,000 Interest Expense Cash

Solution

Solution: No. Account Titles and Explanation Debit Credit a. Accounts Payable 91,000 Notes Payable 91,000 No. Account Titles and Explanation Debit Credit b. Notes Payable 91,000 Interest Expense 3,413 Cash 94,413 Working Notes: Interest Expense = note value x rate x days/360 =$91,000 x 15% x 90 /360 =$3,412.50 =$3,413 Please feel free to ask if anything about above solution in comment section of the question.