Chapters 911 Help Save Exit Submit On November 1 Alan Compa

Chapters 9-11 Help Save & Exit Submit On November 1, Alan Company signed a 120-day, 10% note payable, with a fa value of $21,000. Alan made the appropriate year-end accrual. What is the journal entry as of March 1 to record the payment of the note assuming no reversing entry was made? (Use 360 days a year) Multiple Choice Debit Cosh $21,350, credit Notes Payable $21,350. Debit Notes Payable $21,000, debit Interest Payeble $35o debit Interest Expense $350, crecit Cash $21,700. Debit Notes Payable $21700, credit Interest Payable $3s0 credit Interest Expense $350, credit Cesh $21,000. Debit Notes Payable $21,000, debit Interest Expense $700 credit Cash $21,700. Debit Notes Peyeble $21,000, cebit interest Payeble $350 crecit Cash $21 350 Prev 1 of 7E Next > 0575.ip A IMG 0575 jpg Show all

Solution

1. Accounting entry for payment of notes payable on March 1 (Interest per month : 175) -

Debit Note payble 21,000 Debit Interest Payable 350 Debit Interest expense 350 Credit cash 21,700

2. Accounting entry for Declaration of Dividend on common stock outstanding i.e., 10,400*0.50 = 5200 -

Debit retained earnings 5200 and credit common dividends payable 5200

3. Accounting Entry for first interest payment -

Debit Bond interest expense 16000 credit cash 16000