Financial & Managerial Accounting 17th Edition by Jan Williams ,Susan Haka,Mark Bettner,Joseph Carcello

Exercise 43

Notes Payable: Accruing Interest
During the fiscal year ended December 31, Swanlee Corporation engaged in the following transactions involving notes payable:

Instructions
a. Prepare journal entries (in general journal form) to record the above transactions. Use a 360-day year in making the interest calculations.
b. Prepare the adjusting entry needed at December 31, prior to closing the accounts. Use one entry for all three notes (round to the nearest dollar).
c. Provide a possible explanation why the new 60-day note payable to Moontime Equipment pays 16 percent interest instead of the 10 percent rate charged on the September 16 note.