Notes Payable, Interest Payable, and Interest Expense
Post to the accounts Notes Payable, Interest Payable, and Interest Expense.
P2-2A The following are selected transactions of Detroit Company. Detroit prepares financial statements quarterly. (A perpetual inventory system is used.)
Jan. 2 Purchased merchandise on account from Teresa Speck Company, $15,000, terms 2/10, n/30. Feb. 1 Issued a 10%, 2-month, $15,000 note to Teresa Speck in payment of account.
Mar. 31 Accrued interest for 2 months on Teresa Speck note.
Apr. 1 Paid face value and interest on Teresa Speck note.
July 1 Purchased equipment from Scottie Equipment paying $11,000 in cash and signing a 10%, 3-month, $24,000 note.
Sept. 30 Accrued interest for 3 months on Scottie note.
Oct. 1 Paid face value and interest on Scottie note.
Dec. 1 Borrowed $10,000 from the Federation Bank by issuing a 3-month, 9%-interest-bearing note with a face value of $10,000.
Dec. 31 Recognized interest expense for 1 month on Federation Bank note.
1. Post to the accounts Notes Payable, Interest Payable, and Interest Expense.
2. Show the balance sheet presentation of notes payable at December 31.
3. What is total interest expense for the year?