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2 September, 15:40

On November 1, 2021, Aviation Training Corp. borrows $48,000 cash from Community Savings and Loan. Aviation Training signs a three-month, 6% note payable. Interest is payable at maturity. Aviation's year-end is December 31. Required: 1.-3. Record the necessary entries in the Journal Entry Worksheet below.

Journal Entry Worksheet

Record the issuance of note.

Record the adjustment for interest.

Record the repayment of the note at maturity.

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  1. 2 September, 15:58
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    The journal entries are shown below:

    (A) Cash A/c Dr $48,000

    To Notes payable A/c $48,000

    (Being note is issued for cash)

    (B) Interest expense A/c Dr $480

    To Interest payable A/c $480

    (Being accrued interest adjusted)

    The computation is shown below:

    = Principal * rate of interest * number of months : (total number of months in a year)

    = $48,000 * 6% * (2 months : 12 months)

    = $480

    The 2 months is calculated from November 1 to December 31

    (C) Interest expense A/c Dr $240

    Interest payable A/c Dr $480

    Notes payable A/c Dr $48,000

    To Cash A/c $48,720

    (Being cash is paid on maturity)

    The computation is shown below:

    = Principal * rate of interest * number of months : (total number of months in a year)

    = $48,000 * 6% * (1 months : 12 months)

    = $480

    The 1 months is calculated from December 31 to January 31
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