Abusiness issued a 120-day, 6% note for $10,000 to a creditor on account. the company uses a 360-day year for interest calculations. journalize the entries to record (a) the issuance of the note and (b) the payment of the note at maturity, including interest. description debit credit (a) (b)

Explanation:

(a). The journal entry for issuance of note is shown below:

Accounts payable A/c Dr    $10,000

  To Notes Payable                               $10,000

(Being notes payable is issued)

(b). The journal entry for payment of the note at the time of maturity is shown below:

Notes Payable A/c Dr      $10,000

Interest expense A/c Dr    $200*

      To Cash                                    $10,200

(Being payment of note with interest is recorded)

* The computation of interest expense is shown below

= Issued amount × rate of interest × number of days ÷ total number of days

= $10,000 × 6% × 120/360

= $200

answer; /// the above statement is (false);