Sample Problem Problem 16-2A

Give the general journal entry: Issued a 6-month, 10 percent note for $40,000 to purchase two forklifts on May 14, 2007 (debit Warehouse Equipment) May 14Warehouse Equipment40,000 Notes Payable – trade40,000 Notes Payable – trade40,000 Issued a 6-month, 10% note for Issued a 6-month, 10% note for warehouse equipment warehouse equipment Click for sound: Click for sound:

Give the general journal entry: Discounted its own 180-day, non-interest bearing note with a principal amount of $14,500 at the Mart National Bank on May 28, The bank charged a discount rate of 9 percent May 28 Cash13, Interest expense Interest expense Notes payable-bank 14, Notes payable-bank 14, Discounted 180-day note at 9% Discounted 180-day note at 9% *interest expense calculation: 14,500 x 9% x 180/360

Give the general journal entry: Paid the May 14 note on its due date 2007 Nov 14 Notes payable-trade40, Interest expense 2, Interest expense 2, Cash 42, Paid 6-month, 10% note for $40,000, Paid 6-month, 10% note for $40,000, dated May 14, 2007 dated May 14, 2007 *Interest calculation: 40,000 x 10% x 6/12

Give the general journal entry: Paid the note discounted on May 28 on its due date 2007 Nov 24 Notes payable – bank14, Cash 14, Paid 180-day note for $14,500 discounted Paid 180-day note for $14,500 discounted on May 28, on May 28, 2007.