Reference no: EM132620834
During the fiscal year ended December 31, Duckworth Corporation engaged in the following transactions involving notes payable:
Sept. 16. Purchased office equipment from Earthtime Equipment. The invoice amount was $24,000, and Earthtime agreed to accept, as full payment, on 12%, three-month note for the invoice amount.
Nov. 1. Borrowed $100,000 from Sandra Duckworth, a major corporate stockholder. The corporation issued Duckworth a $100,000, 15%, 120-day note payable.
Dec. 1. Purchased merchandise inventory in the amount of $5,000 from Teller Corporation. Teller accepted a 90-day, 14% note as a full settlement of the purchase. Duckworth Corporation uses a perpetual inventory system.
Dec. 16. The $24,000 note payable to Earthtime Equipment matured today. Duckworth paid the accrued interest on this note and issued a new 30-day, 16% note payable in the amount of $24,000 to replace the note that matured.
Instructions:
Problem a. Prepare journal entries (in general journal form) to record the above transactions. Use a 360-day year in making the interest calculations.
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