During 2014, Cobalt Co. borrowed cash from Azores Enterprises by issuing notes payable as follows: 1. March

Question:

During 2014, Cobalt Co. borrowed cash from Azores Enterprises by issuing notes payable as follows:
1. March 31, 2014, issued a one-year, 4% note for $100,000. Interest is payable quarterly, on June 30, September 30, and December 31, 2014, and March 31, 2015. Principal is payable at maturity.
2. June 1, 2014, issued a nine-month, 4.5% note for $60,000. Interest and principal are payable at maturity.
3. September 1, 2014, issued a three-month, 5% note for $25,000. Interest is payable monthly on the first day of the month. Principal is payable at maturity.
Both Cobalt and Azores prepare adjusting entries on an annual basis. Cobalt has a September 30 fiscal year end.
Azores' fiscal year end is October 31.
Instructions
(a) Prepare all necessary journal entries for Cobalt in 2014 and 2015 regarding the notes and interest including adjusting entries. Prepare separate adjusting entries for each note if an adjustment is required.
(b) Prepare all necessary journal entries for Azores in 2014 and 2015 regarding the notes and interest including adjusting entries. Prepare separate adjusting entries for each note if an adjustment is required.
TAKING IT FURTHER Is it appropriate for Cobalt to have interest payable on its September 30, 2014, if the interest isn't payable until some point after the year end? Explain.
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...