Question

Monty Corporation sells rock-climbing products and also operates an indoor climbing facility for climbing enthusiasts. During the last part of 2020, Monty had the following transactions related to notes payable.

Sept. 1		Issued a $14,400 note to Pippen to purchase inventory. The 3-month note payable bears interest of 6% and is due December 1. (Monty uses a perpetual inventory system.)
Sept. 30		Recorded accrued interest for the Pippen note.
Oct. 1		Issued a $19,200, 8%, 4-month note to Prime Bank to finance the purchase of a new climbing wall for advanced climbers. The note is due February 1.
Oct. 31		Recorded accrued interest for the Pippen note and the Prime Bank note.
Nov. 1		Issued a $25,200 note and paid $8,700 cash to purchase a vehicle to transport clients to nearby climbing sites as part of a new series of climbing classes. This note bears interest of 6% and matures in 12 months.
Nov. 30		Recorded accrued interest for the Pippen note, the Prime Bank note, and the vehicle note.
Dec. 1		Paid principal and interest on the Pippen note.
Dec. 31		Recorded accrued interest for the Prime Bank note and the vehicle note.

Prepare journal entries for the transactions noted above. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Record journal entries in the order presented in the problem.)

Date	Account Titles and Explanation	Debit	Credit

Post the above entries to the Notes Payable, Interest Payable, and Interest Expense accounts. (Post entries in the order of journal entries posted in the previous part of the question.)

Notes Payable
Interest Expense
Interest Payable

Answer 1

Journal entries
Date	Particulars	Debit ($)	Credit ($)
Sep-01	Accounts payable	14400
	Notes payable		14400
Sep-30	Interest expense	72
	Interest payable		72
Oct-01	Bank loan	19200
	Notes payable		19200
Oct-31	Inteest expense	200
	interest payable(128+72)		200
Nov-01	Vehicle	33900
	Cash		8700
	Notes payable		25200
Nov-30	Interest expense(126+72+128)	326
	Interest payable		326
Dec-01	Notes payable	14400
	interest payable	216
	cash		14616
Dec-31	interest expense	254
	Interest payable		254
T- Accounts
Notes payable
Dec-01	14400	Sep-01	14400
		Oct-01	19200
		Nov-01	25200
Balance cr	44000
Interest expense
Sep-30	72
Oct-31	200
Nov-30	326
Dec-31	254
Balance Dr	852
interest payable
Dec-11	216	Sep-30	72
		Oct-31	0
		Nov-30	326
		Dec-31	254
balacne Cr	436
Notes payable	44400
interest payable	436
interest expense incurred during the year	852