Graves Company borrows $73,900 on July 1 from the bank by signing a $73,900, 7%,

Question

Graves Company borrows $73,900 on July 1 from the bank by signing a $73,900, 7%, 1-year note payable. Prepare the journal entries to record the proceeds of the note. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Prepare the journal entries to record the accrued interest at December 31, assuming adjusting entries are made only at the end of the year. (Round to 0 decimal places, e.g. 62. Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Explanation / Answer

Solution:

(A). July -1

   Cash 73,900

   Notes Payable 73,900

(B). December -31: Accrued Interest Expencess:

   Interest Expencess 5,173

Interest Payable 5,173   

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