Question

Prepare general journal entries for the following transactions.

If an amount box does not require an entry, leave it blank. When required, enter amounts to the nearest cent. Assume 360 days in a year.

June 15	Purchased $6,000 worth of equipment from a supplier on account.
July 15	Issued a $6,000, 30-day, 7% note in payment of the account payable.
Aug. 14	Paid $300 cash plus interest to the supplier, extending the note for 30 days from August 14.
Sept. 13	Paid the note in full.
27	Issued a $5,400, 60-day, 6% note to a supplier for purchase of merchandise.

Answer 1

The required journal entries are shown as follows:-

  Journal Entries (Amounts in $)

Date	Account Titles and Explanation	Debit	Credit
June 15	Equipment	6,000
	Accounts Payable		6,000
	(To record the purchase of equipment on account)
July 15	Accounts Payable	6,000
	Notes Payable		6,000
	(To record the issue of notes payable)
Aug. 14	Notes Payable	300
	Interest Expense (6,000*7%*30/360)	35
	Cash		335
	(To record the payment of cash and interest)
Sept. 13	Notes Payable ($6,000-$300)	5,700
	Interest Expense (5,700*7%*30/360)	33
	Cash		5,733
	(To record the payment of notes payable)
Sept. 27	Merchandise inventory	5,400
	Notes Payable		5,400
	(To record the issue of note for purchase of merchandise)

Working Notes:-

1) The interest on note for 30 days on $5,700 (i.e. balance amount of notes payable) will be paid on Sept. 13 along with the balance amount of notes payable (as the note is paid in full on Sep. 13).