Entries for Notes Payable A business issued a 60day 10 note

Entries for Notes Payable A business issued a 60-day, 10% note for $93,000 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.

Solution

No

Accounts Tittles and explanations

Debit ($)

Credit ($)

(a)

Accounts Payable A/c

93,000

To Note Payable A/c

93,000

[Entry to record the issuance of the note to the creditor]

(b)

Note Payable A/c

93,000

Interest Expense A/c

1,550

To Cash A/c

94,550

[ Entry to record the payment of the note at maturity, including interest ]

*Interest Expense on the note payable at maturity = $93,000 x 10% x 60/360 = $1,550