Question

On November 7, 2017, Mura Company borrows $160,000 cash by signing a 90-day, 8% note payable with a face value of $160,000. (Use 360 days a year. Do not round your intermediate calculations.)
1. Compute the accrued interest payable on December 31, 2017


Principal xRate (%) xTime =Interest

Total Through Maturity 160,000 8 90/360 3,200

Year end interest accrual 160,000 8 54/360 1,920

Interest Recognized Feb. 5 160,000 8 4/360 1,280

2. & 3. Prepare the journal entry to record the accrued interest expense at December 31, 2017 and payment of the note at maturity

Record the accrued interest expense.


2) Dec. 31, 2017


3) Feb 05, 2018


(ALL IM MISSING FOR THIS ONE IS THE AMOUNT OF $ CREDITED IN ACCOUNTS PAYABLE, ITS NOT $1,920 OR $3,200 OR 1,280)

Answer 1

Answer:

interst expense 1,920 debit

     interest payable      1,920 credit

--to record year-end adjustment--

interest expense     1,280 debit

interest payable      1,920 debit

note payable       160,000 debit

     cash                               163,200 credit

--to record the honor of the note--

Explanation:

principal x rate x time = interest

principal 160,000

rate 8% annual

days from November 7th to December 31th: 54 days

160,000 x 0.08 x 54/360 = 1,920 interest expense

at maturity:

160,000 x 0.08 x 90/360 = 3,200

3,200 total interest less 1,920 accrued interest = 1,280