Question

On September 1, Knack Company signed a $50,000, 90-day, 5% note payable with Central Savings Bank. What is the journal entry that should be recorded by Knack upon maturity of the note

Answer 1

Answer:

A journal entry was prepared for KNACK COMPANY that recorded Knack Maturity of Notes.

Explanation:

Solution

Given That:

                                      KNACK COMPANY

                                        JOURNAL ENTRY

Date       Accounts and Explanation               Debit  Credit

Sep 01                    5% Notes Payable A/C        50000

              Interest Expenses A/C (50000*5%*90/360)625

                        Cash Account                                           50625

                (record maturity of notes payable)

Therefore from the Journal entry, Debit notes payable 50000; Debit Interest Epenses 625; Credit Cash 50625.