On June 1,2010,Martin Company Signed a $25,000,120-Day,6% Note Payable to Cover

question 151

Essay

On June 1,2010,Martin Company signed a $25,000,120-day,6% note payable to cover a past due account payable.
a. What is the total amount of interest to be paid on this note?
b. Prepare Martin Company's general journal entry to record the issuance of the note payable
c. Prepare Martin Company's general journal entry to record the payment of the note on
September 29, 2010.

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Definitions:

Average Total Costs

The total cost of production (fixed and variable costs combined) divided by the number of units produced; it shows the cost per unit of output.

Variable Costs

Costs that change in proportion to the level of output in the production process.

Total Fixed Cost

The sum of all costs that remain constant regardless of the level of production or output in the short run.

Marginal Cost

The expense associated with manufacturing an extra unit of a product or service.