Reference no: EM131129298
The following are selected transactions of Donn Company. Donn prepares financial statements quarterly.
Jan. 2 Purchased merchandise on account from Stein Company, $20,000, terms 2/10, n/30.
Feb. 1 Issued a 12%, 2-month, $20,000 note to Stein in payment of account.
Mar. 31 Accrued interest for 2 months on Stein note.
Apr. 1 Paid face value and interest on Stein note.
July 1 Purchased equipment from Morelli Equipment paying $12,000 in cash and signing a 10%, 3-month, $25,000 note.
Sept. 30 Accrued interest for 3 months on Morelli note.
Oct. 1 Paid face value and interest on Morelli note.
Dec. 1 Borrowed $15,000 from the Federated Bank by issuing a 3-month,12% note with a face value of $15,000.
Dec. 31 Recognized interest expense for 1 month on Federated Bank note.
Instructions
(a) Prepare journal entries for the above transactions and events.
(b) Post to the accounts, Notes Payable, Interest Payable, and Interest Expense.
(c) Show the balance sheet presentation of notes and interest payable at December 31.
(d) What is total interest expense for the year?