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nata0808 [166]
3 years ago
12

Q 10.25: Admire County Bank agrees to lend Givens Brick Company $600,000 on January 1st. Givens Brick Company signs a $600,000,

8%, 9-month note. Assuming that interest has already been accrued to September 30th, what entry will Givens Brick Company make to pay off the note and interest at maturity
Business
1 answer:
Shtirlitz [24]3 years ago
7 0

Answer:

Entry is given below

Explanation:

As Givens brick company is paying off the liability of note payable and the interest amount therefore, it will be debited as it is a decrease in liability. Cash will be credited as it is our asset and its decreasing.

Entry                      DEBIT          CREDIT

Notes payable     $600,000

Interest                 $36,000(w)

Cash                                           $636,000

Working

Interest = $600,000 x 8% x9/12

Interest = $36,000

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