Exercise 10-3 On June 1, Crane Company Ltd. borrows $44,000 from Acme Bank on a

Question

Exercise 10-3 On June 1, Crane Company Ltd. borrows $44,000 from Acme Bank on a 6-month, $44,000, 6% 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 Debit Credit June 1 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 Debit Credit June 30 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 Debit Credit Dec. 1 What was the total financing cost (interest expense)? Total interest expense $

Explanation / Answer

Jun-01 Cash 44000      Notes payable 44000 Jun-30 Interest expense 220 =44000*6%/12      Interest payable 220 Non-30 Interest payable 1320 Notes payable 44000       Cash 45320 Total interest expense $1320

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