The following were among the transactions of Kenton Company during this year. The firm, whose fiscal year ends on December 31, uses a periodic inventory system.
May 24 Gave a 60-day, 5.5 percent note, dated May 24, for $ 60,000 to Dart Builders for additional office space.
June 20 Borrowed $ 15,500 from Ford Bank, signing a 3-month, 6 percent note, dated June 20, for that amount (received full face value).
July 15 Gave a 120-day, 6 percent note, dated July 15, for $ 10,400 to Charley’s Carpentry for shelving units. The invoice was not previously recorded.
18 Borrowed $ 25,500 from Hartman Bank for 60 days; discount rate is 6.5 percent. Accordingly, signed a discounted note for $ 25,500, dated July 18.
23 Paid Dart Builders the amount owed on the note of May 24.
Sept. 16 Paid the note given Hartman Bank.
20 Paid interest on the note issued to Ford Bank; renewed the loan by issuing a new 60-day, 6.5 percent note, dated September 20.
Oct. 27 Gave the following two notes to Cory Company in settlement of its October 27 invoice for merchandise: $ 12,000 note for 45 days at 6 percent, dated October 27; $ 12,000 note for 60 days at 6.25 percent, dated October 27. The invoice was not previously recorded.
Nov. 12 Paid Charley’s Carpentry the amount owed on the note of July 15.
19 Paid the note given to Ford Bank.
Dec. 11 Paid the amount owed on the 45-day note given to Cory Company.
15 Issued a 60-day, 6.5 percent note, dated December 15, to McNary Company in settlement of November 15 invoice for merchandise, $ 11,360. The invoice was previously recorded.
26 Paid the amount owed on the 60-day note given to Cory Company.
1. Record these transactions in a general journal (pages 26– 29).
2. Immediately after each journal entry, record each note in the notes payable register. Fill in the date paid after journalizing the entry to pay the note or fill in “renewed” if not paid.
3. On December 31, record the adjusting entries to adjust for accrued interest expense for the McNary Company note.
4. On January 1, record the reversing entry. (Assume that closing entries have been made.)
5. On February 13, record the payment of the note to McNary Company.