Eddie Edwards and Phil Bell own and operate The Second Han
Question and Solution
Eddie Edwards and Phil Bell own and operate The Second Hand Equipment Shop. The following transactions involving notes and interest were completed during the last three months of 20--: Oct. 1 Issued a $6,800, 60-day, 10% note to Mac Farm Equipment for purchase of merchandise. 15 Received a $2,000, 60-day, 12% note from R. Chambers in payment for sale of merchandise. Nov. 1 Discounted the note received from R. Chambers on October 15 at Merchants National Bank. The discount rate is 14%. 1 Borrowed $5,000 from First National Bank on a three-month, non-interest-bearing note that was discounted at 10%. 20 Received a $4,000, 90-day, 9% note from L. Revsine in payment of an account receivable. 30 Issued a check to Mac Farm Equipment in payment of the note issued on October 1, including interest. Dec. 10 Issued a $3,000, 90-day, 9% note to Remak Tractors to extend time for payment of an account payable. 16 Received notification from Merchants National Bank that R. Chambers has dishonored his note. A check is issued to cover the note plus a $20 bank fee that must be paid to the bank. REQUIRED 1. Prepare general journal entries for the transactions. 2. Prepare necessary adjusting entries for the notes outstanding on December 31.