Question

Exercise 11-1

C.S. Lewis Company had the following transactions involving notes payable.

July 1, 2017		Borrows $50,000 from First National Bank by signing a 9-month, 8% note.
Nov. 1, 2017		Borrows $61,500 from Lyon County State Bank by signing a 3-month, 6% note.
Dec. 31, 2017		Prepares adjusting entries.
Feb. 1, 2018		Pays principal and interest to Lyon County State Bank.
Apr. 1, 2018		Pays principal and interest to First National Bank.

Prepare journal entries for each of the transactions

Answer 1

Date	General Journal	Debit	Credit
2017
Jul-01	Cash	$ 50,000
	Notes Payable		$ 50,000
	(Being amount borrowed recorded)
Nov-01	Cash	$ 61,500
	Notes Payable		$ 61,500
	(Being amount borrowed recorded)
Dec-31	Interest Expense	$   2,615
	Interest Payable		$   2,615
	[($50,000 X 8% X 6/12) + ($61,500 X 6% X 2/12) = $2,615]
	(Being Interest expense payable recorded)
2018
Feb-01	Notes Payable	$ 61,500
	Interest Expense ($61,500 X 6% X 2/12)	$       615
	Interest Payable ($61,500 X 6% X 1/12)	$       308
	Cash		$ 62,423
	(Being payament recorded)
Apr-01	Notes Payable	$ 50,000
	Interest Expense ($50,000 X 8% X 6/12)	$   2,000
	Interest Payable ($50,000 X 8% X 3/12)	$   1,000
	Cash		$ 53,000
	(Being payament recorded)