Journal Entries for Notes Payable (120-Day 10% Note) – Issuance and Payment with Interest Explained
Learn how to record journal entries for a notes payable transaction when a business issues a 120-day, 10% note for $96,000 to a creditor. This step-by-step explanation shows how to calculate interest using a 365-day year and how to properly record both the issuance of the note and the payment at maturity, including interest expense. The guide is ideal for accounting students and homework help, making it easy to understand notes payable, interest calculation, and correct journal entries.
3/8/20261 min read
Entries for Notes Payable
A business issued a 120-day, 10% note for $96,000 to a creditor on account.
Journalize the entries to record:
(a) the issuance of the note, and
(b) the payment of the note at maturity, including interest.
Assume 365 days in a year.
If an amount box does not require an entry, leave it blank.
If required, round your answers to whole dollars.
a. Record the issuance of the note
Account
Debit
Credit
Cash
______
______
Notes Payable
______
______
b. Record the payment of the note at maturity
Account
Debit
Credit
Notes Payable
______
______
Interest Expense
______
______
Cash
______
______
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