Chapter 4
Current Liabilities
192
AP-6B (
6
)
On July 1, 2016, Express Company purchased a delivery truck from DWTrucks, costing $85,000.
However, due to cash flow problems, Express Company is currently unable to make the
payment. To assure DW Trucks of payment, Express signed a one‐year note with 6% interest
per annum, to be payable at maturity. Express Company’s year‐end is on December 31. Prepare
all the necessary journal entries related to the notes payable from the time it is signed to the
maturity date.
Date
Account Title and Explanation
Debit
Credit
AP-7B (
6
)
On August 1, 2016, DEBTS Bank agreed to lend Zirkula Enterprises $110,000. Zirkula signed a
$110,000, 10‐month, 12% note. Zirkula Enterprises has a year‐end of December 31. Interest is
payable at maturity.
Required
Prepare the journal entry for Zirkula Enterprises for the following.
a) On the date the note was signed
b) At year‐end
c) On May 31, 2017, when the note is repaid
