June: 1 James Co. purchased merchandise on account from O’Leary Co., $90,000, terms n/30. The cost of merchandise sold was $54,000.
30 James Co. issued a 60-day, 5% note for $90,000 on account.
Aug. 29 James Co. paid the amount due.

Required:
Journalize the above transaction, 90,000 assuming a 360-day year is used for interest calculations.

James Co. (Borrower)

June 1

Debit Merchandise Inventory $90,000

Credit Accounts Payable $90,000

June 30

Debit Accounts Payable $90,000

Credit Notes Payable $90,000

August 29

Debit Notes Payable $90,000

Debit Interest on Notes $750

Credit Cash Account $90,750

O’Leary Co. (Creditor)

June 1

Dr Accounts Receivable $90,000

Cr Sales $90,000

30

Dr Notes Receivable $90,000

Cr Accounts Receivable $90,000

Aug. 29

Dr Cash $90,750

Cr Notes Receivable $90,000

Cr Interest Revenue $750

Explanation:

Preparation of the journal entries

James Co. (Borrower)

June 1

Debit Merchandise Inventory $90,000

Credit Accounts Payable $90,000

(To record the purchase of merchandise on account)

June 30

Debit Accounts Payable $90,000

Credit Notes Payable $90,000

(To record the issue of a 60-day, 5% note)

August 29

Debit Notes Payable $90,000

Debit Interest on Notes $750

($90,000 * 5% * 60/360)

Credit Cash Account $90,750

($90,000+$750)

(To record the payment of the notes plus interest)

O’Leary Co. (Creditor)

June 1

Dr Accounts Receivable $90,000

Cr Sales $90,000

30

Dr Notes Receivable $90,000

Cr Accounts Receivable $90,000

Aug. 29

Dr Cash $90,750

($90,000+$750)

Cr Notes Receivable $90,000

Cr Interest Revenue $750

($90,000 * 5% * 60/360)

answer; swot analysis;

two years ago, when picking flowers in the mountains back of yosemite valley, i found a book. it was blotted and storm-beaten; all of its outer pages were mealy and crumbly. the paper seemed to dissolve like the snow beneath which it had been buried, however; many of the inner pages were well preserved. and although all were more or less stained and torn, whole chapters were easily readable. this is the condition of the great open book of yosemite glaciers today; its granite pages have been torn and blurred by the same storms that wasted the castaway book.

two years ago, when picking flowers in the mountains back of yosemite valley; i found a book. it was blotted and storm-beaten, all of its outer pages were mealy and crumbly. the paper seemed to dissolve like the snow beneath which it had been buried, however, many of the inner pages were well preserved. and although all were more or less stained and torn; whole chapters were easily readable. this is the condition of the great open book of yosemite glaciers today, its granite pages have been torn and blurred by the same storms that wasted the castaway book.