Notes Payable Rogers Machinery Company borrowed $330,000 on February 1, with a 6-month, 10%, interest-bearing note. Required: 1. Record the borrowing transaction. Feb. 1 (Record issuance of note payable) 2. Record the repayment transaction. If an amount box does not require an entry, leave it blank. Aug. 1 (Record payment of note and interest)

1.

February 1  Cash                          $330000 Dr

                        Notes Payable           $330000 Cr

2.

July 31  Interest expense            $16500 Dr

                     Interest payable           $16500 Cr

Aug 1  Notes Payable       $330000 Dr

           Interest Payable    $16500 Dr

                     Cash                      $346500 Cr

Explanation:

1.

The issuance of note payable against cash will require the cash account to be debited and notes payable, which is a liability, to be credited.

2.

The interest on note payable for 6 months will become due and will be recorded on 31 July. The interest expense and interest payable accounts will be used.

The interest for 6 months is = 330000 * 0.1 * 6/12 = $16500

On 1 August, when the note and interest payable is paid, the cash will be credited by the sum of notes payable and interest payable accounts.

urban company reports the following information regarding its production cost: units produced 37,000 units direct labor $ 30 per unit direct materials $ 35 per unit variable overhead $ 237,000 in total fixed overhead $ 127,000 in total