The following are selected transactions of Blanco Company. Blanco prepares financial statements quarterly.
| Jan. 2 | Purchased merchandise on account from Nunez Company, $30,000, terms 2/10, n/30. (Blanco uses the perpetual inventory system.) |
| Feb. 1 | Issued a 9%, 2-month, $30,000 note to Nunez in payment of account. |
| Mar. 31 | Accrued interest for 2 months on Nunez note. |
| Apr. 1 | Paid face value and interest on Nunez note. |
| July 1 | Purchased equipment from Marson Equipment paying $11,000 in cash and signing a 10%, 3-month, $60,000 note. |
| Sept. 30 | Accrued interest for 3 months on Marson note. |
| Oct. 1 | Paid face value and interest on Marson note. |
| Dec. 1 | Borrowed $24,000 from the Paola Bank by issuing a 3-month, 8% note with a face value of $24,000. |
| Dec. 31 | Recognized interest expense for 1 month on Paola Bank note |
Instructions
- Prepare journal entries for the listed transactions and events.
- Post to the accounts Notes Payable, Interest Payable, and Interest Expense.
- Show the balance sheet presentation of notes and interest payable at December 31.
- What is total interest expense for the year?
Solution
a.
Blanco Company
Journal Entries
Journal Entries
b.
c.
d.
Total Interest expense for the year = $2,110