May 21 obtained a 60-day extension on a 9000 trade account

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Otter Corporation, whose fiscal year endied June 30, 2011, completed the following transactions involving notes payable:

May 21: Obtained a 60-day extension on a $9000 trade account payable owed to a supplier by signing a 60-day, $9000 note. Interest is in addition to the face value at the rate of 14%

June 30: Made the end-of year adjusting entry to accrue interest expense

July 20: Paid off the note plus interest due the supplier

Required:

1. Prepare journal entries for the notes payable transactions.

2. When notes payable appears on the balance sheet, what other current liability would you expect to be associated with the notes? What would it mean if this other current liability did not appear?

Reference no: EM13571697

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