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Apr. 20 Purchased $35,500 of merchandise on credit from Locust, terms n/30. May 19 Replaced the April 20 account payable to Locust with a 90-day, 8%, $35,000 note payable along with paying $500 in cash. July 8 Borrowed $63,000 cash from NBR Bank by signing a 120-day, 10%, $63,000 note payable. __?__ Paid the amount due on the note to Locust at the maturity date. __?__ Paid the amount due on the note to NBR Bank at the maturity date. Nov. 28 Borrowed $21,000 cash from Fargo Bank by signing a 60-day, 7%, $21,000 note payable. Dec. 31 Recorded an adjusting entry for accrued interest on the note to Fargo Bank.

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Answer:

April 20

Dr Inventory 35,500

Cr Account payable 35,500

May 19

Dr account payable 35,500

Cr cash 500

Cr note payable 35,000

Juy 8

Dr Cash 63,000

Cr Note payable 63,000

Aug 17

Dr Note payable 35,000

Dr Interest expense 700

Cr Cash 35,700

Nov 5

Dr Note payable 63,000

Dr Interest expense 1,575

Cr Cash 64,575

Nov 28

Dr Cash 21,000

Cr Note payable 21,000

Dec 31

Dr Interest expense 135

Cr Interest payable 135

Jan 27

Dr Note payable 21,000

Dr Interest payable 135

Dr Interest payable 110

Cr Cash 21,245

Explanation:

Adjusting entry for accrued interest on the note to Fargo Bank.

April 20

Dr Inventory 35,500

Cr Account payable 35,500

May 19

Dr account payable 35,500

Cr cash 500

Cr note payable 35,000

Juy 8

Dr Cash 63,000

Cr Note payable 63,000

Aug 17

Dr Note payable 35,000

Dr Interest expense 700

(35,000×8%×90/360)

Cr Cash 35,700

Nov 5

Dr Note payable 63,000

Dr Interest expense 1,575

(63,000×10%×90/360)

Cr Cash 64,575

Nov 28

Dr Cash 21,000

Cr Note payable 21,000

Dec 31

Dr Interest expense 135

( 21,000×7%×33/360)

Cr Interest payable 135

Jan 27

Dr Note payable 21,000

Dr Interest payable 135

Dr Interest payable 110

(21,000×7×27/360)

Cr Cash 21,245

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