Question

Headland Company borrowed $42,000 on November 1, 2017, by signing a $42,000, 9%, 3-month note. Prepare Headland’s November 1, 2017, entry; the December 31, 2017, annual adjusting entry; and the February 1, 2018, entry. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.

Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Answer 1

(a)-Entry to record the proceeds of the note on November 01, 2017

Date	Account Tittles and Explanation	Debit ($)	Credit ($)
Nov 01, 2017	Cash A/c	42,000
	To Note Payable A/c		42,000
	[To Record the Proceeds of the note]

(b)-Entry to record the accrued interest on December 31, 2017

Date	Account Tittles and Explanation	Debit ($)	Credit ($)
Dec 31, 2017	Interest Expense A/c	630
	To Interest Payable A/c		630
	[To record the accrued interest at December 31] [$42,000 x 9% x 2/12]

(c)-Entry to record the payment of note on February 01, 2018

Date	Account Tittles and Explanation	Debit ($)	Credit ($)
Feb 01, 2018	Interest Expense A/c [$42,000 x 9% x 1/12]	315
	Interest Payable A/c	630
	Note Payable A/c	42,000
	To Cash A/c		42,945
	[To record the payment of note on February 01, 2018]