Question

On August 1, 2021, Trico Technologies, an aeronautic electronics company, borrows $20.8 million cash to expand operations. The loan is made by FirstBanc Corp. under a short-term line of credit arrangement. Trico signs a six-month, 6% promissory note. Interest is payable at maturity. FirstBanc Corp.’s year-end is December 31. Required: 1.-3. Record the necessary entries in the Journal Entry Worksheet below for FirstBanc Corp. (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field. Enter your answers in dollars, not in millions (i.e. 5 should be entered as 5,000,000).)

Answer 1

Answer:

Record the necessary entries in the Journal Entry Worksheet below for FirstBanc Corp.

August 01, 2021:

Cash-                     20.800.000

Notes Payable-                          20.800.000

December 31, 2021:

Interest Expense-        520.000

Interest Payable-                           520.000

January 31, 2022:

Notes Payable-     20.800.000

Interest Payable-    520.000

Interest Expense-    104.000

Cash-                                           21.424.000

Explanation:

August 01, 2021:

Cash-                     20.800.000

Notes Payable-                          20.800.000

December 31, 2021:

Interest Expense-        520.000

Interest Payable-                           520.000

January 31, 2022:

Notes Payable-     20.800.000

Interest Payable-    520.000

Interest Expense-    104.000

Cash-                                           21.424.000