James Walker owns Walker Auto Sales He periodically borrows

James Walker owns Walker Auto Sales. He periodically borrows money from New Orleans State Bank and Trust. He permits some customers to sign short-term notes for their purchases. He usually discounts these notes at the bank. Following are selected transactions that occurred in March 2019. DATE TRANSACTIONS 2019 Mar. 4 Mr. Walker borrows $10,000 from the bank on a note payable for the business. Terms of the note are 8 percent interest for 45 days. 11 A 90-day $9,000 note payable to the bank is discounted at a rate of 10 percent. 22 Sold a car to Damon Wilson for $15,000 on a 75-day note receivable, bearing interest at 10 percent. 23 Discounted the Wilson note with the bank. The bank charges a discount rate of 12 percent. 25 Sold a car for $15,000 to Derrick Wells. Wells paid $2,000 cash and signed a 30-day note, bearing interest at 10 percent, for the balance. 28 Terry Owens\'s account receivable is overdue. Sims requires him to sign a 12 percent, 30-day note for the balance of $5,500. Additional Data Walker pays all the company’s notes payable on time. Damon Wilson defaults on his $15,000 note and the bank charges the company’s checking account for the maturity value of the note and a service fee of $30. Derrick Wells pays his note on time. Terry Owens pays his note on time. Required: Record each of the March transactions in the general journal. Record the additional data related to these notes for months other than March. Analyze: What is the Notes Payable account balance on March 25?

Solution

Journal

Journal for additional data

Notes payable account balance on Mar 25

= $10000 - $9000

= $1000