On january 1, avers co. borrowed $10,000 by extending their past-due account payable with a a 60-day, 8% interest-bearing note. on march 1, the due date, avers pays the amount due in full. this entry would be recorded by avers with a debit to (accounts payable/notes payable/ in the amount of

Notes payable; $10,000

Explanation:

Given that,

Borrowing amount = $10,000

Time period = 60 day

Interest rate = 8%

On the due date of the note, avers co. paid the amount.

Therefore, this entry would be recorded by Avers with a debit to Notes payable with an amount of $10,000.

Interest amount = $10,000 × (60 ÷ 360) × 0.08

                           = $10,000 × 0.17 × 0.08

                           = $136

(Note: Assuming 360 days in a year)

Therefore, the Journal entry is as follows:

Notes payable A/c     Dr. $10,000

Interest Expense A/c Dr. $136

To cash                                             $10,136

(To record Avers pays the amount due in full)

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