Question

consider the following notes payable transactions of cranmore video productions. view the transactions. journalize the transactions for the company (record debits first, then credits. select the explanation on the last line of the journal entry table) mar 1, 2024 purchased equipment costing $30,000 by issuing a one - year, 9% notes payable dec 31, 2024 accrued interest on the notes payable

Explanation:

Step1: Calculate the interest amount

The formula for simple interest is \(I = P\times r\times t\), where \(P=\$30,000\) (principal), \(r = 9\%=0.09\) (annual interest rate), and \(t=\frac{10}{12}\) (time from March 1 to December 31, 2024, which is 10 months).

$$I=30000\times0.09\times\frac{10}{12}$$

$$I = 30000\times0.075$$

$$I=\$2,250$$

Step2: Record the journal entry

When accruing interest, we debit the Interest Expense account (an expense account that increases with a debit) and credit the Interest Payable account (a liability account that increases with a credit).

Answer:

Date	Accounts and Explanation	Debit	Credit
	Interest Payable		2250
	(To accrue interest on notes payable)