On July 1, 2015, Clayton Shop borrowed $33,000 from the bank. Clayton signed a ten-month, 6% promissory note for the entire amount. Clayton uses a calendar year-end.
REQUIRED:
1. Identify the accounting equation effects for the July 1, 2015 transaction of issuing the promissory note.
2. Identify any adjustments needed at year-end.
3. Identify the accounting equation effects for the May 1, 2016 transaction to record the payment of principal and interest.

Question

Quizplus · Accepted Answer

The Answer of On July 1, 2015, Clayton Shop borrowed $33,000 from the bank. Clayton signed a ten-month, 6% promissory note for the entire amount. Clayton uses a calendar year-end.
REQUIRED:
1. Identify the accounting equation effects for the July 1, 2015 transaction of issuing the promissory note.
2. Identify any adjustments needed at year-end.
3. Identify the accounting equation effects for the May 1, 2016 transaction to record the payment of principal and interest.

On July 1, 2015, Clayton Shop Borrowed $33,000 from the Bank