Record the short-term note payable in a separate account from the long-term note payable.
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ubject: Business / Accounting
Record liability-related transactions) The following transactions of Smooth Sounds Music Company occurred during 2012 and 2013:
2012
Mar 3
Purchased a piano (inventory) for $50,000, signing a six-month, 8% note payable.
May 31
Borrowed $85,000 on an 8% note payable that calls for annual installment payments of $17,000 principal plus interest. Record the short-term note payable in a separate account from the long-term note payable.
Sep 3
Paid the six-month, 8% note at maturity.
Dec 31
Accrued warranty expense, which is estimated at 2.5% of sales of $196,000.
31
Accrued interest on the outstanding note payable.
2013
May 31
Paid the first installment and interest for one year on the outstanding note payable.
1. Record the transactions in Smooth Sound’s journal. Explanations are not required.
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