Many businesses borrow money during periods of increased business activity to fi

Question

Many businesses borrow money during periods of increased business activity to finance inventory and accounts receivable. Neiman Marcus is one of America's most prestigious retailers. Each Christmas season, Neiman Marcus builds up its inventory to meet the needs of Christmas shoppers. A large portion of these Christmas sales are on credit. As a result, Neiman Marcus often collects cash from the sales several months after Christmas. Assume that on November 1, 2014, Neiman Marcus borrowed $5.2 million cash from Texas Capital Bank for work months. The interest rate was 9 percent per annum payable at maturity. The accounting period ends December 31 ing capital purposes and signed an interest-bearing note due in six. Required 1. Prepare the journal entry to record the note on November 1. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in whole dollars not in millions (i.e., 1,000,000 not 1.0).) view transaction listview general journal Journal Entry Worksheet Record the note on November 1 Date November 01 General Journal Debit Credit *Enter debits before credits done clear entry record entry

Explanation / Answer

1-Nov Cash A/c Dr 5200000               To loan from Texa capital Bank 5200000 31-Dec Interest Dr 78000 (5200000*9%*2/12)       To interest Payable A 30-Apr Interest Dr 156000 (5200000*9%*4/12) Interest Payable Dr 78000 Loan from Texas Capital bank 5200000 To cash 5434000

Related Questions

Navigate

• Browse (All)
• Browse M
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.