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What the journal entry for fantastic fashions to record

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Reference no: EM132954207

Fantastic Fashions has just completed its first quarter of operations. Assume that Fantastic Fashions adjusts its book quarterly. Below are transactions that have not yet been recorded.

Jan 1 Made cash sales of $75,000 before tax. HST is collected on all sales at a rate of 13%.
Jan 15 Signed a six month note for $12,000 to extend amounts owing on account to Trendy Taste Inc. Interest is 6% annually and due at maturity.
Mar 1 Received the annual property tax bill for $7,500 payable on Apr 30.
Apr 1 Paid gross salaries of $10,000; of this amount $495 is CPP, $178 is EI and $3,465 is for income taxes.
Apr 30 Paid the property taxes bill in full.

Problem 1: The journal entry for Fantastic Fashions to record the note signed on Jan 15 is

Option 1: Accounts Payable-Trendy Taste Inc 12,000
Notes Payable-Trendy Taste Inc. 12,000

Option 2: Notes Payable-Trendy Taste Inc 12,000
Accounts Payable-Trendy Taste Inc. 12,000

Option 3: Accounts Payable-Trendy Taste Inc 12,720
Notes Payable-Trendy Taste Inc. 12,720

Option 4: Notes Payable-Trendy Taste Inc 12,180
Accounts Payable-Trendy Taste Inc. 12,180

Option 5: None of the above

Reference no: EM132954207

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