On May 1 comma 2019 , Jasper Company purchased inventory costing $ 87 comma 000 by signing a 10 %, nine-month, short-term note payable. Jasper will pay the entire note (principal and interest) on the note's maturity date. Journalize the company's (a) purchase of inventory; and (b) accrual of interest on the note payable on November 31 comma 2019. (Record debits first, then credits. Exclude explanations from any journal entries.)

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Business

Haylee Hayes

15 August, 12:06

On May 1 comma 2019 , Jasper Company purchased inventory costing $ 87 comma 000 by signing a 10 %, nine-month, short-term note payable. Jasper will pay the entire note (principal and interest) on the note's maturity date. Journalize the company's (a) purchase of inventory; and (b) accrual of interest on the note payable on November 31 comma 2019. (Record debits first, then credits. Exclude explanations from any journal entries.)

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Trevor Wallace · Answer 1

The Journal entries are as follows:

(i) On May 1, 2019

Inventory A/c Dr. $87,000

To Notes payable $87,000

(To record purchase of inventory)

(ii) On Nov 31, 2019

Interest Expense A/c Dr. $5,075

To Interest payable $5,075

(To record the Accrued the interest.)

Workings:

May to Nov = 7 months

Therefore,

Interest Expense = 87,000 * 10% * 7:12

= $5,075