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25 February, 07:06

Dunlin Development Company had the following transactions involving notes payable. Nov. 1, 2016 Borrows $120,000 from Merchants and Marine Bank by signing a 3-month, 10% note. Dec. 31, 2016 Prepares the adjusting entry. Feb. 1, 2017 Pays principal and interest to Merchants and Marine Bank. Prepare journal entries for each of the transactions. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

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  1. 25 February, 07:16
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    November 1, 2016

    Dr Cash 120,000

    Cr Notes Payable 120,000

    December 31, 2016

    Dr Interest Expense 2,000

    Cr Interest Payable 2,000

    February 1, 2017

    Dr Notes Payable 120,000

    Dr Interest Payable 2,000

    Dr Interest Expense 1,000

    Cr Cash 123,000

    Explanation:

    Dunlin Development Company Journal entries

    November 1, 2016

    Dr Cash 120,000

    Cr Notes Payable 120,000

    December 31, 2016

    Dr Interest Expense 2,000

    ($120,000 * 10% * 2/12)

    Cr Interest Payable 2,000

    February 1, 2017

    Dr Notes Payable 120,000

    Dr Interest Payable 2,000

    Dr Interest Expense 1,000

    (120,000*10%*1/12)

    Cr Cash 123,000
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