Respuesta :
Answer:
Dr cash $1,800,000
Cr Notes payable $1,800,000
Interest accrual:
Dr Interest expense $24,000
Cr Interest payable $24,000
Assets =liabilities + shareholders'equity
+Cash $1,800,000 =+loan $1800,000
=+liabilities $24,000 + -retained earnings $2400
Explanation:
The issue of notes payable on November 1 2015 implies that there is cash inflow of $1,800,000 while current liabilities also increased by $1,800,000,as result cash is debited with the $1,800,000 and credit is posted notes payable.
On 31st December ,interest of two months would been incurred and should be accrued in the accounts with amount below:
$1,800,000*8%*2/12=$24,000
This should be debited to interest expense and credited to interest payable account
- The journal entries and the impacts are to be given below:
(a) On Nov 1
Cash
To Note Payable
(Being the note issued is recorded)
(b) On Dec 31
Interest expense $24,000 (8% of $1,800,000 × 2 ÷ 12)
To Interest payable $24,000
(Being interest expense is recorded)
- Now the impacts are as follows:
Assets = Liabilities + Equity
+ Cash + Note payable ($1,800,000)
($1,800,000) + Interest payable ($24,000) - Interest expense ($24,000)
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