Prob 10.3A
During the fiscal year ended December 31, Swanson Corporation engaged in the following transactions involving notes payable:
Aug 6. Borrowed $12,000 from Maple Grove Bank, signing a 45-day, 12 percent note payable.
Sept 16. Purchased office equipment from Seawald Equipment. The invoice amount was $18,000 and Seawald agreed to accept, as full payment, a 10%, three montth note for the invoice
Sept 20. Paid Maple Grove Bank the note plus accrued interest.
Nov 1. Borrowed $250,000 from Mike Swqanson, a major corporate stockholder. The corporation issued Swanson a $250,000, 15%, 90 day note payable
Dec 1. Purchased merchandise inventory in the afmount of $5,000 from Gatham Corporation. Gatham accepted a 90 day, 14% note as full settlement of the purchase. Swanson Corp uses a perpetual inventory system.
Dec 16. The $18,000 note payable to Seawald Equipment matured today. Swanson paid the accrued interest on this note and issued a new 30 day, 16% note payable in the amount of $18,000 to replace the note that matured.

A. Prepare journal entries (in general joural form) to record the above transactions. Use a 360-day year in making the interest calculations.
B. Prepare the adjusting entry needed at Dec 31, prior to closing the accounts. Use one entry for all three notes (round to the nearest dollar)
C. Provide a possible explanation why the new 30 day note payable to Seawald Equipemnt pays 16% interest instead of the 10% rate charged on the September 16 note.