10 HW C O ezto.mheducation.com/hm.tpx Nicole thinks that her business, Nicole\'s

Question

10 HW C O ezto.mheducation.com/hm.tpx Nicole thinks that her business, Nicole's Getaway Spa (NGS), is doing really well and she is planning a large expansion. With such a large expansion, Nicole will need to finance some of it using debt. She signed a one-year note payable with the bank for $46,000 with a 5 percent interest rate. The note was issued October 1, 2014 interest is payable semiannually; and the end of Nicole's accounting period is December 31. Required: Prepare the journal entries required from the issuance of the note until its maturity on September 30, 2015, assuming that no entries are made other than at the end of the accounting period, when interest is payable, and when the note reaches its maturity (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field. Do not round intermediate calculations.) View transaction list 1 Record the borrowing of $46,000 2 Record the accrued interest on December 31, 2014. 3 Record the interest payment on March 31, 2015, assuming no interest accrual has been recorded since December 31, 2014 Record the interest payment on September 30, 2015, assuming no interest accrual has been recorded since the payment on March 31, 2015. 0 Record the repayment of the note on its maturity date

Explanation / Answer

Journal entries :

Date accounts & explanation debit credit 2014, oct 1 Cash a/c 46000      Notes payable a/c 46000 (To record amount borrowed) 2014, dec 31 Interest expenses a/c (46000*5%*3/12) 575      Interest payable a/c 575 (To record accured interest) 2015, mar 31 Interest payable a/c 575 Interest expenses a/c 575       Cash a/c 1150 (To record interest payament) 2015, sep 30 Interest expenses a/c 1150      Cash a/c 1150 (To record interest payment) 2015, sep 30 Notes payable a/c 46000      Cash a/c 46000 (To record maturity of notes)

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