Question

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

July 1, 2022		Borrows $47,000 from First National Bank by signing a 9-month, 8% note.
Nov. 1, 2022		Borrows $50,000 from Lyon County State Bank by signing a 3-month, 6% note.
Dec. 31, 2022		Prepares adjusting entries.
Feb. 1, 2023		Pays principal and interest to Lyon County State Bank.
Apr. 1, 2023		Pays principal and interest to First National Bank.

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

July 1, 2022	Cash	enter a debit amount	enter a credit amount
	Notes Payable	enter a debit amount	enter a credit amount
November 1, 2022	Cash	enter a debit amount	enter a credit amount
	Notes Payable	enter a debit amount	enter a credit amount
December 31, 2022	Interest Expense	enter a debit amount	enter a credit amount
	Interest Payable	enter a debit amount	enter a credit amount
	(To record accrual of interest from First National Bank)
December 31, 2022	Interest Expense	enter a debit amount	enter a credit amount
	Interest Payable	enter a debit amount	enter a credit amount
	(To record accrual of interest from Lyon County State Bank)
February 1, 2023	Interest Expense	enter a debit amount	enter a credit amount
	Interest Payable	enter a debit amount	enter a credit amount
	Notes Payable	enter a debit amount	enter a credit amount
	Cash	enter a debit amount	enter a credit amount
April 1, 2023	Interest Expense	enter a debit amount	enter a credit amount
	Interest Payable	enter a debit amount	enter a credit amount
	Notes Payable	enter a debit amount	enter a credit amount
	Cash	enter a debit amount	enter a credit amount

Answer 1

Journal

Date	Account Title and Explanation	Debit	Credit
July 1, 2022	Cash	47,000
	Note payable		47,000
November 1, 2022	cash	50,000
	Note payable		50,000
December 31, 2022	Interest expense	1,880
	Interest payable		1,880
	(To record accrual of interest from First National Bank)
December 31, 2022	Interest expense	500
	Interest payable		500
	(To record accrual of interest from Lyon County State Bank)
February 1, 2023	Interest expense	250
	Interest payable	500
	Note payable	50,000
	cash		50,750
April 1, 2023	Interest expense	940
	Interest payable	1,880
	Note payable	47,000
	cash		49,820

Interest accrued on First National Bank note at Dec 31, 2022 = Note payable x Interest rate x 6/12

= 47,000 x 8% x 6/12

= $1,880

Interest accrued on Lyon County State Bank note at dec 31, 2022 = Note payable x Interest rate x 2/12

= 50,000 x 6% x 2/12

= $500

Interest expense on Lyon County State Bank note at Feb 1, 2023 = Note payable x Interest rate x 1/12

= 50,000 x 6% x 1/12

= $250

Interest expense on First National Bank note at April 1, 2023 = Note payable x Interest rate x 1/12

= 47,000 x 8% x 1/12

= $940