On May 15, Wild Quest Clothiers borrowed some money on a 5-month note to provide

Question

On May 15, Wild Quest Clothiers borrowed some money on a 5-month note to provide cash during the slow season of the year. The interest rate on the note was 8%. At the time the note was due, the amount of interest owed was $450. Determine the amount borrowed by Wild Quest. (Round intermediate calculation to 6 decimal places, e.g. 1.251241 and final answer to o decimal places, e.g. 125.) Amount borrowed by Wild Quest g Assume the amount borrowed was $14,800. What was the interest rate if the amount of interest owed was $555? (Round intermediate calculation to 6 decimal places, e.g. 1.251241 and final answer to 0 decimal places, e.g. 152.) Interest Rate Prepare the entry for the initial borrowing and the repayment for the facts in part (a). (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Initial Borrowing: Debit Credit May 15 Repayment: Sept. 15

Explanation / Answer

(a) amount borrowed= ($450 x 12/5 x 100/8) $             13,500 (b) the interest rate if the amount of interest owed was $555- ($555 x 12/5 = 1332/14800x 100 ) 9% (c.) 15-May initial borrowing Dr Cash $13500 Cr Note payable $13500 15-Sep repayment Dr Interest expense $450 Dr Note payable $13500 Cr Cash $13950

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