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Journal entry

Asked Feb 7, 2007, 08:37 PM — 1 Answer
Does anyone know how to write the journal entry for this?

Transaction occurred on April 1, 20X5:

Paid the $16,000 note and all interest accrued to date.
The company had borrowed the $16,000 on October 1, 20X4.
Interest accrued on the note at a rate of 10% annually.

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CaptainForest Posts: 3,684, Reputation: 2085
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#2

Feb 8, 2007, 09:15 PM
First, we must compute the total interest.

I will take it your dates are Oct 2004 – April 2005.

Therefore a total of 6 months outstanding

10% annually = 5% in this case.

16,000 x 0.05 = 800

Dr. Notes Payable 16,000
Dr. Interest Expense 800
Cr. Cash 16,800
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