Exercise 9-4 Interest-bearing notes payable with year-end adjustments LoO P1 Kee

Question

Exercise 9-4 Interest-bearing notes payable with year-end adjustments LoO P1 Keesha Co.borrows $175,000 1. On what date does this note mature? (Assume that February has 28 deys) cash on November 1, 2017, by signing a 120-day 11% note with a face value of $175,000. O March 27, 2018. O March 28,2018 O March 29, 2018 OMarch 30, 2018. March 01, 2018. 2. & 3. What is the amount of interest expense in 2017 and 2018 from this note? (Use 360 days a year. Round final answers to the nearest whole dollar.) Total through Interest maturity Interest 2017 Expe nse 2018

Explanation / Answer

1. The note will mature on March 01, 2018.

2. Interest in 2017 = $175,000 X 0.11 X 60/360 = $3,208

3. Interest in 2018 = $175,000 X 0.11 X 60/360 = $3,208

4.

(a) Cash. $175,000

Notes payable. $175,000

(Being notes payable issued of $175,000)

(b) Interest on notes payable 3,208

Outstanding Interest. 3,208

(Being interest liability recorded for notes payable.)

(C). Notes payable. $175,000

Interest on notes payable. 3,208

Outstanding interest. 3,208

Cash. 181,416

(Being payment made for notes payable with 11% interest.)

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