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chapter 9 prob 1

# chapter 9 prob 1 - LO 2 PROBLEM 9-1 NOTES AND INTEREST 1 a...

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LO 2 PROBLEM 9-1 NOTES AND INTEREST 1. a. Jan. 1 Cash 25,000 Note Payable 25,000 To record loan at 10% interest. Assets = Liabilities + Owners’ Equity +25,000 +25,000 b. Jan. 10 Memorandum entry only. c. Feb. 1 Equipment 18,800 Discount on Notes Payable 1,200 Notes Payable 20,000 To record non-interest-bearing note. \$20,000 × 12% × 1/2 = \$1,200. Assets = Liabilities + Owners’ Equity +18,800 +20,000 –1,200 d. Mar. 1 Cash 150,000 Loan Payable 150,000 To record loan with line of credit. Assets = Liabilities + Owners’ Equity +150,000 +150,000 e. June 1 Loan Payable 100,000 Interest Expense (100,000 × 9% × 3/12) 2,250 Cash 102,250 To record partial payment of line of credit. Assets = Liabilities + Owners’ Equity –102,250 –100,000 –2,250 f. June 30 Interest Expense 2,750 Interest Payable 2,750 To record interest on interest-bearing loan. \$25,000 × 10% × 1/2 = \$1,250 \$50,000 × 9% × 4/12 = 1,500 \$2,750 Assets = Liabilities + Owners’ Equity +2,750 –2,750 June 30 Interest Expense 1,000 Discount on Notes Payable 1,000 To record interest on non-interest-bearing note. \$1,200 × 5/6 = \$1,000. 9-1

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9-2 FINANCIAL ACCOUNTING SOLUTIONS MANUAL
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