Accounting 101 Financial accounting Cybertext project. I don t quite understand what to do for the journal entry.?

Question

the full problem:

June 2: A down payment of $28.000 in cash was made on computer equip. that was purchased for $140,000. A five-year note was used for the rest of the balance.

June 10: Byte paid $21,500 on the balance it owed on the June 2 purchase.

now here is where I m stuck: (It s the adjustment entry)
#34 : the note payable relating to the June 2&10 transactions is a five-year note, with interest at the rate of 12 percent annually. The june interest expense from this note is $902.00

what accounts do you Debit/credit in the general journal and how do you know what amount of money?

Answer 1

The question tells you the interest is 902



Its calculated as 112000 x 12% x 8/360 +90500 x 12% x 20/360 = 902



DR: Interest expense 902

CR: Interest payable 902

Answer 2

Original loan of 112,000 @12% = 13,440 per yr / 365 = 36.822 per day x 8 days = 294.58

1112,000 - 21,500 = 90,500 @12% = 10,860 per yr / 365 = 29.753 per day x 20 days = 595.06

Total interest expense in June = 889.64 vs 902.00?



6/2 - DR Equipment 140,000 CR Cash 28,000 CR Notes Payable 112,000

6/10 - DR Notes Payable 21,500 CR Cash 21,500

6/30 - DR Interest Expense 902.00 CR Accrued Interest 902.00

Answer 3

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