Exercise 10-3 On June 1, Cullumber Company Ltd. borrows $72,000 from Acme Bank o

Question

Exercise 10-3 On June 1, Cullumber Company Ltd. borrows $72,000 from Acme Bank on a 6-month, $72,000, 4% 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 une 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 une 30 Credit 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 indent manually.) Date Account Titles and Explanation Dec. 1 Debit Credit

Explanation / Answer

Date Account Head & Description Debit Amount Credit Amount June 1 Cash 72000 6 months 4% note payable 72000 (to record the issue of note payable) June 30 Interest expenses (72000*4%*1/12) 240 Interest payable 240 (to record the interest expenses for June) Dec 1 6 months 4% note payable 1440 Interest payable (72000*4%*6/12)* 1440 Cash (to record the settlement of note payable) Total interest expenses (72000*4%*6/12) = $1440

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