Hammer Company, whose fiscal year ends December 31, completed the following transactions involving notes payable:

2011

Nov. 25 Purchased a new loading cart by issuing a 60-day, 10 percent note for $86,400.

Dec. 31 Made the end-of-year adjusting entry to accrue interest expense.

2012

Jan. 24 Paid off the loading cart note.

REQUIRED

1. Prepare journal entries for Hammer’s notes payable transactions.

2. When notes payable appears on the balance sheet, what other current liability would you expect to be associated with the notes? What would it mean if this other current liability did not appear?