[The following information applies to the questions displayed below.] Precision

Question

[The following information applies to the questions displayed below.]

Precision Castparts, a manufacturer of processed engine parts in the automotive and airline industries, borrows $39 million cash on October 1, 2015, to provide working capital for anticipated expansion. Precision signs a one-year, 7% promissory note to Midwest Bank under a prearranged short-term line of credit. Interest on the note is payable at maturity. Each firm has a December 31 year-end.

Prepare the journal entries on October 1, 2015, to record the issuance of the note. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.Enter your answers in dollars, not in millions.)

B)

Record the adjustment on December 31, 2015. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round intermediate calculations. Enter your answers in dollars, not in millions.)

C) Prepare the journal entry on September 30, 2016, to record payment of the notes payable at maturity.(If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round intermediate calculations. Enter your answers in dollars, not in millions.)

Precision Castparts, a manufacturer of processed engine parts in the automotive and airline industries, borrows $39 million cash on October 1, 2015, to provide working capital for anticipated expansion. Precision signs a one-year, 7% promissory note to Midwest Bank under a prearranged short-term line of credit. Interest on the note is payable at maturity. Each firm has a December 31 year-end.

Prepare the journal entries on October 1, 2015, to record the issuance of the note. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.Enter your answers in dollars, not in millions.)

B)

Record the adjustment on December 31, 2015. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round intermediate calculations. Enter your answers in dollars, not in millions.)

C) Prepare the journal entry on September 30, 2016, to record payment of the notes payable at maturity.(If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round intermediate calculations. Enter your answers in dollars, not in millions.)

Explanation / Answer

Journal Entry 1-Oct-15 Cash Dr 39000000 To Notes Payable 7% 39000000 31-Dec-15 Interest Dr 682500 39000000*7%*3/12 To Interest Payable 682500 30-Sep-16 Notes Payable 7% 39000000 Interest Payable 682500 Interest 2047500 39000000*7%*9/12 To cash 41730000

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