Barkers Baked Goods purchases dog treats from a supplier on February 2 at a quantity of 12,000 treats at $2 per treat. Terms of the purchase are 2/10, n/30. Barkers pays half the amount due in cash on February 28 but cannot pay the remaining balance due in four days. The supplier renegotiates the terms on March 4 and allows Barkers to convert its purchase payment into a short-term note, with an annual interest rate of 6 percent, payable in 9 months.

A. Compute the interest expense due when Barkers honors the note.

Remember the formula used to calculate the amount of interest expense. Refer to the textbook for an example. The formula involves three important components.

B. Show the entry to record the payment of the short-term note on December 4. If an amount box does not require an entry, leave it blank.

Dec. 4	Accounts PayableAccounts ReceivableCashShort-Term Notes PayableSalesShort-Term Notes Payable	Short-Term Notes Payable	Short-Term Notes Payable
	Accounts PayableAccounts ReceivableCashInterest ExpenseSales DiscountsInterest Expense	Interest Expense	Interest Expense
	Accounts PayableAccounts ReceivableCashInterest ExpenseShort-Term Notes PayableCash	Cash	Cash

Answer rating: 100% (QA)

A Number of units produced 12000 Cost per unit 2 T... View the full answer