Problem – 2
Main Company has a fiscal year ending on December 31. The company purchased equipment costing $88,000 on Octber 2, 2011. The equipment was purchased by signing a 9%, 120 – day note payable for the equipment.
1. Prepare the Journal entries to record the following events. Use a 360-day year and round all amounts to the nearest dollar.
a. The purchase of equipment on October 2, 2011
b. The accrual of interest on December 31, 2011
c. Payment of note on January 30, 2012
2. Determine the balance of any current liabilities associated the note on December 31, 2011