Problem: Adjusting Entries for Interest
At December 31, 2021, Hoffman Corporation had two notes payable outstanding (notes 1 and 2). At December 31, 2022, Hoffman also had two notes payable outstanding (notes 3 and 4). These notes are described below:
|
|
Date of note
|
Principal Amount
|
Interest Rate
|
Number of Days
|
|
December 31, 2021
|
|
|
|
|
|
Note 1
|
Novemer 16, 2021
|
$120,000
|
10%
|
120
|
|
Note 2
|
December 04, 2021
|
160,000
|
8%
|
60
|
|
December 31, 2022
|
|
|
|
|
|
Note 3
|
December 07, 2022
|
90,000
|
9%
|
60
|
|
Note 4
|
December 21, 2022
|
180,000
|
10%
|
30
|
Task
1. Prepare the adjusting entries for interest at December 31, 2021.
2. Assume that the adjusting entries were made at December 31, 2021. Prepare the 2022 journal entries to record payment of the notes that were outstanding at December 31, 2021.
3. Prepare the adjusting entries for interest at December 31, 2022.