On December 1, 2019, Jim\'s JavaJoint borrowed $50,000 from its bank in order to

Question

On December 1, 2019, Jim's JavaJoint borrowed $50,000 from its bank in order to expand its operations. The firm issued a four-month, 6 percent note for $50,000 to the bank and received $49,000 in cash because the back deducted the interest for the entire period in avance.

In general form, Show the entry that would be made to record this transaction and the adjustment for period interest that should be recorded on the firm's worksheet for the year ended December 31, 2019

Dec 01,2019 Record the borrowing?

Dec 31, 2019 Record the adjustment for interest?

Explanation / Answer

Dec 1 2019 Cash A/c 49000 Prepaid Interest A/c 1000 To Loan A/c 50000 Dec 31 2019 Interest Expense A/c (1000/4) 250 To Prepaid Interest A/c 250

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