Exercise 10-3 On June 1, Wildhorse Co. Ltd. borrows $74,400 from Acme Bank on a

Question

Exercise 10-3 On June 1, Wildhorse Co. Ltd. borrows $74,400 from Acme Bank on a 6-month, $74,400, 10% 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 June 1 Debit Credit 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 June 30 Debit Credit

Explanation / Answer

Journal entry :

Total interest expenses = 74400*10%*6/12 = 3720

date accounts & explanation debit credit june 1 Notes payable 74400 Cash a/c 74400 (To record loan borrowed) June 30 Interest expenses a/c (74400*10%*1/12) 620 Interest payable a/c 620 (To record accured interest) dec 1 Notes payable 74400 Interest payable 3720 Cash a/c 78120 (To record maturity of note)

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