Brief Exercise 132 whisper ng Company borrowed 32400 on Nove

Brief Exercise 13-2 whisper ng Company borrowed $32,400 on November 1, 2017, by signing a S32,400 8%, 3-month note. Pre are whispen s November 2017 entry: the December .2017 annual adjusting entr the February 1, 2018, entry. (If no entry is required, select \"No Entry\" for the account titles and enter O for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit

Solution

Date Account titles and explanation Debit Credit November 1, 2017 Cash $       32,400 Notes Payable $       32,400 (To record amount borrowed by signing a note) December 31, 2017 Interest Expense $ 432 Interest Payable $ 432 (To record interest accrued at december 31) February 1, 2018 Interest Expense $ 216 Interest Payable $ 432 Notes Payable $       32,400 Cash $       33,048 (To record notes payment along with interest) Working: Total Interest Expense for 3 months = $       32,400 x 8% x 3/12 = $        648 Interest acrued for 2 months at December 31 = $       32,400 x 8% x 2/12 = $        432 Interest expense for 1 year = $       32,400 x 8% x 1/12 $        216