Question

Question 1: Short-term Notes Payable

On October 1, 2019, ABC Company borrowed $100,000 cash on a 6-month note payable. The annual interest rate is 12 percent. The principal and all the interests were paid by ABC at the maturity date, March 31, 2020. What is the journal entry to be recorded for ABC on December 31, 2019?

Question 2: Stock Repurchase and Reissuance

On December 3, 2019, ABC Company reissued 10,000 shares of the treasury stock at $40 per share. Suppose the cost of the treasury stock was $15 per share. What is the journal entry to be recorded for ABC on December 3, 2019?

Answer 1

	Working Notes:
		Company Borrowed =	$1,00,000
		Annual Interest Rate =	12%
		Total interest of one year	$12,000
		Bonds Issue Date	October 01, 2019
		Adjsuting entry required	December 31, 2019
		Total Period expired	3 Months
		Interest expenses upto December 31 = ($ 12,000 X 3 month / 12 Month)	$3,000
Solution : 1
	Journal Entries
	Date	ACCT Title and explanation	Debit	Credit
	Dec 31, 2019	Interest Expenses	$3,000
		Interest Payable		$3,000
Solution : 2
	Journal Entries
	Date	ACCT Title and explanation	Debit	Credit
	Dec 03, 2019	Cash (10,000 Shares X $ 40)	$4,00,000
		Treasury Stock (10,000 Shares X $ 15)		$1,50,000
		Additional Paid in capital excess of par - Treasury Stock (Bal. amt)		$2,50,000