3. Notes payable. Red BankEnterprises was involved in the following transactions during thefiscal year ending October 31:<?xml:namespace prefix = ons = "urn:schemas-microsoft-com:office:office" />
8/2:
Borrowed $75,000 from the Bank ofKingsville by signing a 120-day, 12% note.
8/20:
Issued a $40,000 note to Harris Motors forthe purchase of a $40,000 deÂlivery truck. The note is due in 180days and carries a 12% interest rate.
9/10:
Purchased inventory from Pans Enterprisesin the amount of $15,000. Issued a 30-day, 12% note in settlementof the balance owed.
9/11:
Issued a $60,000 note to Datatex Equipmentin settlement of an overdue account payable of the same amount. Thenote is due in 30 days and carÂries a 14% interest rate.
10/10:
The note to Pans Enterprises was paid infull.
10/11: The note toDatatex Equipment was paid in full.
11/30: Paid note to Bank of Kingsville
Instructions
a. Prepare journal entries to record thetransactions.
b. Prepare adjusting entries on December 31to record accrued interest (daily interest is calculated utilizingthe 360 day method).
c. Prepare the Current Liability section ofRed Bank%u2019s balance sheet as of December 31. Assume that theAccounts Payable account totals $203,600 on this date.
3. Notes payable. Red BankEnterprises was involved in the following transactions during thefiscal year ending October 31:<?xml:namespace prefix = ons = "urn:schemas-microsoft-com:office:office" />
8/2:
Borrowed $75,000 from the Bank ofKingsville by signing a 120-day, 12% note.
8/20:
Issued a $40,000 note to Harris Motors forthe purchase of a $40,000 deÂlivery truck. The note is due in 180days and carries a 12% interest rate.
9/10:
Purchased inventory from Pans Enterprisesin the amount of $15,000. Issued a 30-day, 12% note in settlementof the balance owed.
9/11:
Issued a $60,000 note to Datatex Equipmentin settlement of an overdue account payable of the same amount. Thenote is due in 30 days and carÂries a 14% interest rate.
10/10:
The note to Pans Enterprises was paid infull.
10/11: The note toDatatex Equipment was paid in full.
11/30: Paid note to Bank of Kingsville
Instructions
a. Prepare journal entries to record thetransactions.
b. Prepare adjusting entries on December 31to record accrued interest (daily interest is calculated utilizingthe 360 day method).
c. Prepare the Current Liability section ofRed Bank%u2019s balance sheet as of December 31. Assume that theAccounts Payable account totals $203,600 on this date.
