Graves uses the perpetual inventory system

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Reference no: EM13789121

The following are selected transactions of Graves Company. Graves prepares financial statements quarterly.

Jan. 2 Purchased merchandise on account from Ally Company, $33,225, terms 2/10, n/30. (Graves uses the perpetual inventory system.)

Feb. 1 Issued a 6%, 2 month, $33,225 note to Ally in payment of account.

Mar. 31 Accrued interest for 2 months on Ally note. Apr. 1 Paid face value and interest on Ally note.

July 1 Purchased equipment from Clark Equipment paying $11,760 in cash and signing a 7%, 3 month, $39,280 note. Sept. 30 Accrued interest for 3 months on Clark note.

Oct. 1 Paid face value and interest on Clark note.

Dec. 1 Borrowed $27,000 from the Jonas Bank by issuing a 3 month, 6% note with a face value of $27,000.

Dec. 31 Recognized interest expense for 1 month on Jonas Bank note.

1) Prepare journal entries for the listed transactions and events. (Round answers to 0 decimal places, e.g. 125. Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Date Account Titles and Explanation Debit Credit  

Jan. 2

Feb. 1

Mar. 31

Apr. 1

July 1

Sept. 30

Oct. 1

Dec. 1

Dec. 31

2) Post to the accounts Notes Payable, Interest Payable, and Interest Expense. (Post entries in the order of journal entries in the previous question.)

A) Notes Payable

B) Interest Payable

C) Interest Expense

3) Show the balance sheet presentation of notes and interest payable at December 31.

Graves Company Balance Sheet:

4) What is total interest expense for the year?

Total interest = $

Reference no: EM13789121

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