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On November 1, Alan Company signed a 120-day, 9% note payable, with a face value of $24,000. Alan made the appropriate year-end accrual. What is the journal entry as of March 1 to record the payment of the note assuming no reversing entry was made

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tutorAnne

Answer: P;ease see answers in explanation column

Explanation:

Interest payable  = Principal x rate  x time(period)

= $24,000 x 9% x  60/360 ( Number  of days from Nov to Dec 31 )

=$360

Interest expense=  Principal x rate  x time(period)

$24,000 x 9% x  60/360 ( Number  of days from Jan to Feb 31 )

$360

Date accounts & explanation   Debit               credit

Mar 1    Notes payable                  $24,000  

Interest payable                                    $360  

Interest expense                                     $360  

Cash                                                                          $24,720

abiolataiwo2015

The journal entry as of March 1 to record the payment of the note assuming no reversing entry was made is:

Alan Company Journal entry

March 1

Debit Notes Payable $24,000

Debit Interest Payable $360

($27,000×9%×60/360)

Debit Interest Expense $360

($27,000×9%×60/360)

Credit Cash $24,720

($24,000+$360+$360)

(To record payment of note)

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