ubject: Business / Accounting
Record liability-related transactions) The following transactions of Smooth Sounds Music Company occurred during 2012 and 2013:
Purchased a piano (inventory) for $50,000, signing a six-month, 8% note payable.
Borrowed $85,000 on an 8% note payable that calls for annual installment payments of $17,000 principal plus interest. Record the short-term note payable in a separate account from the long-term note payable.
Paid the six-month, 8% note at maturity.
Accrued warranty expense, which is estimated at 2.5% of sales of $196,000.
Accrued interest on the outstanding note payable.
Paid the first installment and interest for one year on the outstanding note payable.
1. Record the transactions in Smooth Sound’s journal. Explanations are not required.
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