Question: Sherlock Sports Authority purchased inventory costing $30,000 by signing a 4%,..........

(a) Purchase of inventory:

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Inventory          30,000

Notes Payable      30,000

(b) Accrual of interest expense on April 30, 2022:

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Interest Expense   1,200

Interest Payable   1,200

    ($30,000 x 4% x 9/12 = $1,200)

(c) Payment of the note plus interest on July 31, 2022:

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Notes Payable      30,000

Interest Payable   1,200

Cash               31,200

    ($30,000 x 4% x 12/12 = $1,200)

(d) Liabilities on the balance sheet at April 30, 2022:

csharp

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Notes Payable      30,000

Interest Payable   1,200

    (Total liabilities: $31,200)

Interest expense on the income statement for the year ended on April 30, 2022:

Interest Expense   1,200

(a) Purchase of inventory:

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Inventory          30,000

Notes Payable      30,000

(b) Accrual of interest expense on April 30, 2022:

javascript

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Interest Expense   1,200

Interest Payable   1,200

    ($30,000 x 4% x 9/12 = $1,200)

(c) Payment of the note plus interest on July 31, 2022:

javascript

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Notes Payable      30,000

Interest Payable   1,200

Cash               31,200

    ($30,000 x 4% x 12/12 = $1,200)

(d) Liabilities on the balance sheet at April 30, 2022:

csharp

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Notes Payable      30,000

Interest Payable   1,200

    (Total liabilities: $31,200)

Interest expense on the income statement for the year ended on April 30, 2022:

Interest Expense   1,200

(a) Purchase of inventory:

Copy code

Inventory          30,000

Notes Payable      30,000

(b) Accrual of interest expense on April 30, 2022:

javascript

Copy code

Interest Expense   1,200

Interest Payable   1,200

    ($30,000 x 4% x 9/12 = $1,200)

(c) Payment of the note plus interest on July 31, 2022:

javascript

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Notes Payable      30,000

Interest Payable   1,200

Cash               31,200

    ($30,000 x 4% x 12/12 = $1,200)

(d) Liabilities on the balance sheet at April 30, 2022:

csharp

Copy code

Notes Payable      30,000

Interest Payable   1,200

    (Total liabilities: $31,200)

Interest expense on the income statement for the year ended on April 30, 2022:

Interest Expense   1,200