Notes Payable

May 23 Replaced the April 22 account payable to Fox Products with a 60-day, $4,600 note bearing 15% annual interest along with paying $400 in cash.

Debit Account Payable $5,000 Debit Cash $400 Credit Note Payable $4,600

July 15 Borrowed $12,000 cash from Spring Bank by signing a 120-day, 10% interest-bearing note with a face value of $12,000.

Debit Cash $12,000 Credit Note Payable $12,000

December 6 Borrowed $8,000 cash from City Bank by signing a 45-day, 9% interest-bearing note with a face value of $8,000.

Debit Cash $8,000 Credit Note payable $8,000

December 31 Recorded an adjusting entry for accrued interest on the note to City Bank.

Debit Interest Expense $50 Credit Interest Payable $50

April 22 Purchased $5,000 of merchandise on credit from Fox Products, terms are 1/10, n/30. Warner uses the perpetual inventory system.

Debit Merchandise Inventory $5,000 Credit Accounts Payable $5,000

July 22 Paid the amount due on the note to Fox Products at maturity.

Debit Note Payable $4,600 Debit Interest Expense $115 Credit Cash $4,715

November 12 Paid the amount due on the note to Spring Bank at maturity.

Debit Notes payable $12,000 Debit Interest Expense $400 Credit Cash $12,400

January 20 Paid the amount due on the note to City Bank at maturity.

Debit notes payable $8,000 Debit interest expense $40 Debit interest expense payable $50 Credit cash $8,090

Determining new expenses

amount of note x interest x days/360

Determining the Maturity Dates

Know what months have 30 days and 31 days