On June 1, Fancher Company Ltd. borrows $180,000 from First Bank on a 6-month, $
ID: 2471899 • Letter: O
Question
On June 1, Fancher Company Ltd. borrows $180,000 from First Bank on a 6-month, $180,000, 6% note. The note matures on December 1.
Prepare the entry on June 1. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)
Date
Account Titles and Explanation
Debit
Credit
June 1
2. Prepare the adjusting entry on June 30. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)
Date
Account Titles and Explanation
Debit
Credit
June 30
3. Prepare the entry at maturity (December 1), assuming monthly adjusting entries have been made through November 30. (Credit account titles are automatically indented when amount is entered. Do not indnt manually.)
Date
Account Titles and Explanation
Debit
Credit
Dec. 1
4. What was the total financing cost (interest expense)?
Total interest expense
$
Date
Account Titles and Explanation
Debit
Credit
June 1
Explanation / Answer
June 1 . Bank debit 180000
6% Notes payable credit 180000
June 30 interest debit 900 ( 180000 × 6% × 1/12 )
Interest payable credit 900
December 1. Notes payabel debit 180000
Interest paybale debit 5400 (180000 × 6% × 6/12)
Bank credit 185400
4 total interest cost = $5400
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