Greener Pastures Corporation borrowed $2,000,000 on November 1, 2015. The note c
ID: 2415839 • Letter: G
Question
Greener Pastures Corporation borrowed $2,000,000 on November 1, 2015. The note carried a 12 percent interest rate with the principal and interest payable on June 1, 2016. (a) The note issued on November 1. (b) The interest accrual on December 31.
Prepare the journal entries related for the above transactions. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field. Do not round intermediate calculations.)
Greener Pastures Corporation borrowed $2,000,000 on November 1, 2015. The note carried a 12 percent interest rate with the principal and interest payable on June 1, 2016. Record the borrowing of $2,000,000.
Nov 1, 2015 Debit Credit
Greener Pastures Corporation borrowed $2,000,000 on November 1, 2015. The note carried a 12 percent interest rate with the principal and interest payable on June 1, 2016. Record the interest accrued on the notes payable.
Dec 31, 2015 Debit Credit
Prepare the journal entries related for the above transactions. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field. Do not round intermediate calculations.)
Greener Pastures Corporation borrowed $2,000,000 on November 1, 2015. The note carried a 12 percent interest rate with the principal and interest payable on June 1, 2016. Record the borrowing of $2,000,000.
Nov 1, 2015 Debit Credit
Greener Pastures Corporation borrowed $2,000,000 on November 1, 2015. The note carried a 12 percent interest rate with the principal and interest payable on June 1, 2016. Record the interest accrued on the notes payable.
Dec 31, 2015 Debit Credit
Explanation / Answer
Journal Entries:
Date
Accounts Title and Explanations
Debit
Credit
Nov. 1, 2015
Cash
$ 2,000,000
Notes Payable
$ 2,000,000
(Being note issued for cash )
Dec. 31, 2015
Interest Expense
$ 40,000
Interest Payable
$ 40,000
(Being interest on note payable accrued)
Calculation :
Period from Nov 1 to Dec 31 = 2 months
Interest = 2000000*12%*2/12 = $40000
Journal Entries:
Date
Accounts Title and Explanations
Debit
Credit
Nov. 1, 2015
Cash
$ 2,000,000
Notes Payable
$ 2,000,000
(Being note issued for cash )
Dec. 31, 2015
Interest Expense
$ 40,000
Interest Payable
$ 40,000
(Being interest on note payable accrued)
Calculation :
Period from Nov 1 to Dec 31 = 2 months
Interest = 2000000*12%*2/12 = $40000
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