Alpha Company prepares quarterly adjusting entries. On August 1, 2017. Alpha Company purchased equipment with a...

Alpha Company prepares quarterly adjusting entries. On August 1, 2017. Alpha Company purchased equipment with a sticker price of $8,515 and signed a note due in 9 months for $10,000 that included interest in the valve of the note. Use this information to prepare the general journal entry for the November 1 equipment purchase. Prepare any additional general journal adjusting entries for Fiscal Years 2017 $ 2018. Additionally, prepare the general journal entry to record the payment of the note when due in 2018.

Expert Solution

Total Interest Payable on Note = 10000 - 8515 = $1,485

Monthly Interest = 1485 / 9 = $165 per month

Date	Account Titles and Explanation	Debit	Credit
1 August 2017	Equipment	8,515
	Deferred Interest Expense	1,485
	Notes Payable		10,000
30 September 2017	Interest Expense (165*2)	330
	Deferred Interest Expense		330
31 December 2017	Interest Expense (165*3)	495
	Deferred Interest Expense		495
31 March 2018	Interest Expense (165*3)	495
	Deferred Interest Expense		495
30 April 2018	Interest Expense (165*1)	165
	Deferred Interest Expense		165
30 April 2018	Notes Payable	10,000
	Cash		10,000

ekkarill92 answered 1 year ago

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