Date Account Titles and Explanation Debit Credit May 10 May

Date

Account Titles and Explanation

Debit

Credit

May 10

May 18

June 1

Sept. 30

Account Titles and Explanation

Debit

Credit

Open Show Work

Problem 153

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ANS 1. JOURNAL ENTRIES

ACCOUNT TITLES & EXPLANATIONS

WORKING NOTES : INTEREST EXPENSE RECORDED AND DISCOUNT AMORTIZATION

1. INTEREST EXPENSE FOR THE YEAR ENDING 31ST DECEMBER

Interest on Notes =54000*9/100*7/12= $2834.

2. DISCOUNT AMORTIZATION ENTRY FOR THE YEAR ENDING ON 31ST DECEMBER

DISCOUNT FOR THE YEAR = 220000*10% = $ 22000

DISCOUNT UPTO 31ST DECEMBER = 22000/12*3 = $ 5500

2. CURRENT LIABILITIES FOR THE YEAR ENDING 31ST DECEMBER 2014

NOTES : 1. ACCOUNTS PAYABLE HAS BEEN PAID OFF ON MAY 18 HENCE IT HAS NOT BEEN REFLECTED IN CURRENT LIABILITIES .

2. 9 % NOTES PAYABLE ACCOUNT INCLUDES INTEREST UPTO 31ST DECEMBER AMOUNTING TO RS $ 2834.

DATE	ACCOUNT TITLES & EXPLANATIONS	DEBIT	CREDIT
MAY 10	PURCHASES A/C DR	78100
	TO ACCOUNTS PAYABLE		78100
	(BEING PURCHASES MADE )

MAY 18	ACCOUNTS PAYABLE A/C DR	78100
	TO PURCHASES DISCOUNT		1562
	TO CASH		76538
	(BEING PAYMENT MADE AND CASH DISCOUNT AVAILED)

JUNE 1	EQUIPMENT A/C DR	85200
	TO CASH A/C		31200
	TO 9% NOTE PAYABLE A/C		54000
	(BEING EQUIPMENT PURCHASED IN CASH & Notes Payable issued )