ermlar corporation sells rock-climbing products and alsooperates an indoor climbing facility for climbing enthusiasts.during the last part of 2014, ermlar had the following transactionsrelated to notes payable
Sept. 1
Issued a $12,000 note to Lippert to purchase inventory. The3-month note payable bears interest of 6% and is due December 1.(Ermlar uses a perpetual inventory system.)
Sept.30
Recorded accrued interest for the Lippert note.
Oct. 1
Issued a $16,500, 8%, 4-month note to Shanee Bank to finance thepurchase of a new climbing wall for advanced climbers. The note isdue February 1.
Oct. 31
Recorded accrued interest for the Lippert note and the ShaneeBank note.
Nov. 1
Issued a $26,000 note and paid $8,000 cash to purchase a vehicleto transport clients to nearby climbing sites as part of a newseries of climbing classes. This note bears interest of 6% andmatures in 12 months.
Nov. 30
Recorded accrued interest for the Lippert note, the Shanee Banknote, and the vehicle note.
Dec. 1
Paid principal and interest on the Lippert note.
Dec. 31
Recorded accrued interest for the Shanee Bank note and thevehicle note.
1.prepare journal entries for the transactions noted above.
2.post above entries to the notes payable, interest payable, andinterest expense accounts using a T-acounts
3.show the balance sheet presentation of the notes payable andinterest paybale at dec.31
4.how much interest expense relating to notes payable did ermlarincur the year?
ermlar corporation sells rock-climbing products and alsooperates an indoor climbing facility for climbing enthusiasts.during the last part of 2014, ermlar had the following transactionsrelated to notes payable
Sept. 1 | Issued a $12,000 note to Lippert to purchase inventory. The3-month note payable bears interest of 6% and is due December 1.(Ermlar uses a perpetual inventory system.) | |||
Sept.30 | Recorded accrued interest for the Lippert note. | |||
Oct. 1 | Issued a $16,500, 8%, 4-month note to Shanee Bank to finance thepurchase of a new climbing wall for advanced climbers. The note isdue February 1. | |||
Oct. 31 | Recorded accrued interest for the Lippert note and the ShaneeBank note. | |||
Nov. 1 | Issued a $26,000 note and paid $8,000 cash to purchase a vehicleto transport clients to nearby climbing sites as part of a newseries of climbing classes. This note bears interest of 6% andmatures in 12 months. | |||
Nov. 30 | Recorded accrued interest for the Lippert note, the Shanee Banknote, and the vehicle note. | |||
Dec. 1 | Paid principal and interest on the Lippert note. | |||
Dec. 31 | Recorded accrued interest for the Shanee Bank note and thevehicle note. | |||
1.prepare journal entries for the transactions noted above.
2.post above entries to the notes payable, interest payable, andinterest expense accounts using a T-acounts
3.show the balance sheet presentation of the notes payable andinterest paybale at dec.31
4.how much interest expense relating to notes payable did ermlarincur the year?
Related questions
The following transactions were completed by Hobson Inc., whosefiscal year is the calendar year:
| 2014 | |
| July 1. | Issued $7,430,000 of five-year, 8%callable bonds dated July 1, 2014, at a market (effective) rate of9%, receiving cash of $7,136,042. Interest is payable semiannuallyon December 31 and June 30. |
| Oct. 1. | Borrowed $310,000 as a 10-year, 7%installment note from Marble Bank. The note requires annualpayments of $44,137, with the first payment occurring on September30, 2015. |
| Dec. 31. | Accrued $5,425 of interest on theinstallment note. The interest is payable on the date of the nextinstallment note payment. |
| Dec. 31. | Paid the semiannual interest on thebonds. The bond discount is amortized annually in a separatejournal entry. |
| Dec. 31. | Recorded bond discount amortizationof $29,396, which was determined using the straight-linemethod. |
| Dec. 31. | Closed the interest expenseaccount. |
| 2015 | |
| June 30. | Paid the semiannual interest on thebonds. |
| Sept. 30. | Paid the annual payment on thenote, which consisted of interest of $21,700 and principal of$22,437. |
| Dec. 31. | Accrued $5,032 of interest on theinstallment note. The interest is payable on the date of the nextinstallment note payment. |
| Dec. 31. | Paid the semiannual interest on thebonds. The bond discount is amortized annually in a separatejournal entry. |
| Dec. 31. | Recorded bond discount amortizationof $58,792, which was determined using the straight-linemethod. |
| Dec. 31. | Closed the interest expenseaccount. |
| 2016 | |
| June 30. | Recorded the redemption of thebonds, which were called at 98. The balance in the bond discountaccount is $176,374 after payment of interest and amortization ofdiscount have been recorded. (Record the redemption only.) |
| Sept. 30. | Paid the second annual payment onthe note, which consisted of interest of $20,129 and principal of$24,008. |
Required:
1. Journalize the entries to record theforegoing transactions. For compound transactions, if an amount boxdoes not require an entry, leave it blank or enter "0". Whenrequired, round your answers to the nearest dollar.
