Prepare the Necessary Journal Entries for the Following Transactions

question 150

Essay

Prepare the necessary journal entries for the following transactions:
(a) On September 1, Cole Company borrowed $150,000 from National Bank on a 6-month, 8% note.
(b) On December 31, Cole Company accrued interest (assume adjusting entries are only made at the end of the year).

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Definitions:

Depreciation Expense

The allocated amount of an asset's cost expensed over its useful life to account for its decrease in value.

Accumulated Depreciation

The cumulative depreciation of an asset up to a single point in its life, reflecting its loss of value over time.

Withdrawals Account

An account used to record the amounts taken out of a business by its owner(s) for personal use.

Capital Balance

The amount of money invested in a company by its owners or shareholders, represented in the equity section of the balance sheet.