Notes Payable Example: Journalizing and Accounting for Interest

The video tutorial explains how to handle notes payable, focusing on journalizing events, calculating interest, and making adjustments for notes that span multiple years or are short-term. It covers examples of notes payable that cross year-end, are within a single year, and are short-term, providing detailed steps for each scenario.

What is the formula used to calculate the interest accrued on a loan?

What was the total amount paid by Sierra Company at the end of the loan term?

How did the calculation of interest differ for a note that matures within one year compared to one that spans two years?