Question

Problem 10-2A The following are selected transactions of Blanco Company. Blanco prepares financial statements quarterly. Jan. 2 Purchased merchandise on account from Nunez Company, $21,600, terms 3/10, n/30. (Blanco uses the perpetual inventory system.) Feb. 1 Issued a 9%, 2-month, $21,600 note to Nunez in payment of account. Mar. 31 Accrued interest for 2 months on Nunez note. Apr. 1 Paid face value and interest on Nunez note. July 1 Purchased equipment from Marson Equipment paying $10,400 in cash and signing a 10%, 3-month, $70,800 note. Sept. 30 Accrued interest for 3 months on Marson note. Oct. 1 Paid face value and interest on Marson note. Dec. 1 Borrowed $27,600 from the Paola Bank by issuing a 3-month, 8% note with a face value of $27,600. Dec. 31 Recognized interest expense for 1 month on Paola Bank note.

Answer 1

Date	General Journal	Debit	Credit
2-Jan	Merchandise Inventory or purchases	21,600
	Accounts payable		21,600
1-Feb	Accounts payable	21,600
	Notes Payable		21,600
31-Mar	Interest Expense 21600*2/12*9%	324
	Interest Payable		324
1-Apr	Notes Payable	21,600
	Interest Payable	324
	Cash		21,924
1-Jul	Equipment	81,200
	Cash		10,400
	Note payable		70,800
30-Sep	Interest Expense	1770
	Interest Payable		1,770
	($70,800 X 10% X 3/12)
1-Oct	Notes Payable	70,800
	Interest Payable	1,770
	Cash		72,570
1-Dec	Cash	27,600
	Note payable		27,600
31-Dec	Interest Expense	184
	Interest Payable		184
	27,600*8%*1/12

Notes Payable
1-Apr	21,600	1-Feb	21,600
1-Oct	70,800	1-Jul	70,800
		1-Dec	27,600
		31-Dec	27,600
Interest Payable
1-Apr	324	31-Mar	324
1-Oct	1,770	30-Sep	1,770
		31-Dec	184
		31-Dec	184
Interest Expense
31-Mar	324
30-Sep	1770
31-Dec	184
31-Dec	2,278
Current liabilities
Note payable		27,600
Interest Payable		184
		27,784
Total Interest	2,278