Skate City Corporation sells skateboard products and also operates an indoor skating facility. During the last part

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Skate City Corporation sells skateboard products and also operates an indoor skating facility. During the last part of 2014, Skate City had the following transactions related to notes payable.
Aug. 1Issued a $6,000 note to Wheeler to purchase inventory. The 3-month note payable bears interest of 9% and is due November 1.
Aug. 31 Recorded accrued interest for the Wheeler note.
Sept. 1 Issued a $15,000, 8%, 6-month note to Commerce Bank to finance the purchase of a new ramp for advanced boarders. The note is due March 1.
Sept. 30 Recorded accrued interest for the Wheeler note and the Commerce Bank note.
Oct. 1Issued a $40,000 note and paid $10,000 cash to repair and improve its building. This note bears interest of 8% and matures in 12 months.
Oct. 31 Recorded accrued interest for the Wheeler note, the Commerce Bank note, and the improvement note.
Nov. 1Paid principal and interest on the Wheeler note.
Nov. 30 Recorded accrued interest for the Commerce Bank note and the improvement note.
Dec. 31 Recorded accrued interest for the Commerce Bank note and the improvement note.

Instructions
(a) Prepare journal entries for the transactions noted above.
(b) Post the above entries to the Notes Payable, Interest Payable, and Interest Expense accounts. (Use T-accounts.)
(c) Show the balance sheet presentation of notes payable and interest payable at
December 31.
(d) How much interest expense relating to notes payable did Skate City incur during the year?

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...
Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...
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Related Book For  answer-question

Accounting Tools for Business Decision Making

ISBN: 978-1118128169

5th edition

Authors: Paul D. Kimmel, Jerry J. Weygandt, Donald E. Kieso

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