On August 1, 2019, The Shoppes at Mill Lake, Inc., purchased inventory costing $40,000 by signing a

Question:

On August 1, 2019, The Shoppes at Mill Lake, Inc., purchased inventory costing $40,000 by signing a 6%, six-month, short-term note payable. The company will pay the entire note (principal and interest) on the note’s maturity date.

Requirements

1. Journalize the company’s purchase of inventory.

2. Make the adjusting entry for accrual of interest on the note payable on December 31, 2019.

3. At December 31, 2019, what is reported on the balance sheet related to this note payable?

4. Record the payment of the note payable (principal and interest) on its maturity date.

Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial... Maturity
Maturity is the date on which the life of a transaction or financial instrument ends, after which it must either be renewed, or it will cease to exist. The term is commonly used for deposits, foreign exchange spot, and forward transactions, interest...

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