Accounting for Notes Payable
Response to the following problem:
Sweet's Candy Company needed cash for its current business operations. On January 1, 2008, the company borrowed $8,000 on a two-year, interest-bearing note from Peterson Bank at an annual interest rate of 10%. Interest is payable annually on January 1, and the note matures January 1, 2010. Sweet's Candy Company also borrowed $4,500 from Laurence National Bank on January 1, 2008, signing a three-year, 11% note due on January 1, 2011, with interest payable annually on January 1.
Required:
Prepare all journal entries relating to the two notes for 2008, 2009, 2010, and 2011. Assume that Sweet's Candy Company uses the calendar year for financial reporting. (Round all amounts to the nearest dollar.)