Adjusting entries - As of August 31 Board Shop has a note payable has a balance of $36,000. Of that note payable $6,000 must be paid on Dec. 1 each year. What do I do
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flattsfan
ANSWERS: 1
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If you are paying it monthly the entry would look like this: Board Shop 500 Cash 500 Payment on account payable What you have to do is take the amount owed and divide it by the number of months. So, in this case 6,000 divided by 12, will give you 500/month. That will be the first years payment, you then keep doing this until the amount owing is paid off. You then debit the Board Shop to decrease the amount you owe, and credit your cash, as it will decrease the amount of money you now have because you have spent it paying off bills. Hope this helps.
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