On July 16,Freedom Flight Gave a 120-Day Note Payable to Slick

question 74

Essay

On July 16,Freedom Flight gave a 120-day note payable to Slick and Slide Co.,instead of cash payment of an overdue account.The amount of the note was $75,000 at an interest rate of 14%.Prepare the journal entry and determine the maturity date for Freedom Flight to record payment of the note.

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Definitions:

Permanent Accounts

Balance sheet accounts whose balances are carried over into the next accounting period.

Balance Sheet

A financial statement that shows an entity's assets, liabilities, and shareholders' equity as of a specific date, providing a snapshot of its financial condition.

Financial Statements

Reports that provide an overview of a company's financial condition, including balance sheets, income statements, and cash flow statements.

Income Summary

An account used in the closing process that summarizes the revenues and expenses for a period, helping to determine the net income or loss.