Wellington Company Had the Following Transactions Involving Notes Payable

question 107

Essay

Wellington Company had the following transactions involving notes payable.
Nov. 1, 2013 Borrows $150,000 from Olathe State Bank by signing a 3-month, 10% note.
Dec. 31, 2013 Prepares the adjusting entry.
Feb. 1, 2014 Pays principal and interest to Olathe State Bank.
Instructions
Prepare journal entries for each of the transactions.

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Definitions:

Trial Balance

An accounting report that lists the balances of all ledgers accounts to verify that the total debits equal the total credits, used for internal purposes to check for errors.

Ledger

A book or collection of financial accounts in which transactions are recorded.

Journal

A chronological record of all financial transactions, used as the initial place of entry for such transactions in the accounting system.

Liabilities

Financial obligations or debts that a business owes to others, which must be settled over time through the transfer of economic benefits.