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3 years ago

On June 1, Carla Vista Co. Ltd. borrows $108,000 from Acme Bank on a 6-month, $108,000, 4% note. The note matures on December 1.

Business

1 answer:

evablogger [386]3 years ago

5 0

Answer:

a) Journal entry

Date Account and explanation Debit Credit

June 1 Cash $108,000

Notes payable $108,000

b) Adjusting entry

Date Account and explanation Debit Credit

June 30 Interest expense $360

(108,000*4%*1/12)

Interest payable $360

c) Journal entry

Date Account and explanation Debit Credit

Dec 10 Notes payable $108,000

Interest payable (360*6) $2,160

Cash $110,160

d) Total (interest expenses)

Interest payable = $360 * 6

= $2160

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Option B

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Less: Adjusted basis (175:000)

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