M10-6 Recording a Note Payable [LO 10-2 The following information applies to the

Question

M10-6 Recording a Note Payable [LO 10-2 The following information applies to the questions displayed below] Greener Pastures Corporation borrowed $1,300,000 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 References Section Break M10-6 Recording a Note Payable [LO 10-2] value 2.22 points M10-6 Part 1 Indicate the effects of the amounts for the above transactions. (Enter any decreases to account balances with a minus sign. Do not round intermediate calculations.) 1. Assets Liabilities Stockholders' Equity (a) Cash (b) Interest Expense 1,300,000Notes Payable (long-term) 1,300,000 10,000Interest Payable 10,000

Explanation / Answer

a) Accounting equation :

2) Journal entry :

Assets = Liabilities + Stockholder's equity (a) Cash 1300000 Notes payable 1300000 (b) Interest payable 26000 Interest expense -26000

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