Assignment Problem: Cullumber Corporation sells rock-climbing products and also operates an indoor climbing facility for climbing enthusiasts. During the last part of 2022, Cullumber had the following transactions related to notes payable.
Sept. 1 Issued a $15,600 note to Pippen to purchase inventory. The 3-month note payable bears interest of 7% and is due December 1. (Cullumber uses a perpetual inventory system.)
Sept. 30 Recorded accrued interest for the Pippen note.
Oct. 1 Issued a $18,000,8%, 4-month note to Prime Bank to finance the purchase of a new climbing wall for advanced climbers. The note is due February 1.
Oct. 31 Recorded accrued interest for the Pippen note and the Prime Bank note.
Nov. 1 Issued a $25,200 note and paid $8,100 cash to purchase a vehicle to transport clients to nearby climbing sites as part of a new series of climbing classes. This note bears interest of 8% and matures in 12 months.
Nov. 30 Recorded accrued interest for the Pippen note, the Prime Bank note, and the vehicle note.
Dec. 1 Paid principal and interest on the Pippen note.
Dec. 31 Recorded accrued interest for the Prime Bank note and the vehicle note.
Required -
Problem 1: Prepare journal entries for the transactions noted above.
Problem 2: Post the above entries to the Notes Payable, Interest Payable, and Interest Expense accounts.
Problem 3: Show the balance sheet presentation of notes payable and interest payable at December 31.
Problem 4: How much interest expense relating to notes payable did Cullumber incur during the year?
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