The preparation of the journal entries for each of the transactions for Nihon Company is as follows:
<h3>Journal Entries:</h3>
July 1, 2017 Debit Cash $50,000
Credit Note Payable (First National Bank) $50,000
- To record the receipt of loan on note payable at 12% for 6-months.
Dec. 31, 2017 Debit Interest Expense $3,000
Credit Interest Payable (First National Bank) $3,000
- To accrue interest expense.
Apr. 1, 2018 Debit Interest Expense $1,500
Credit Interest Payable (First National Bank) $1,500
- To accrue interest expense.
Debit Note Payable (First National Bank) $50,000
Debit Interest Payable (First National Bank) $4,500
Credit Cash $54,500
- To record the payment of note payable and interest.
<h3>Transaction Analysis:</h3>
July 1, 2017 Cash $50,000 Note Payable (First National Bank) $50,000
a 6-month, 12% note.
Dec. 31, 2017 Interest Expense $3,000 Interest Payable (First National Bank) $3,000
Apr. 1, 2018 Interest Expense $1,500 Interest Payable (First National Bank) $1,500
Note Payable (First National Bank) $50,000 Interest Payable (First National Bank) $4,500Cash $54,500
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