Answer:
1.
September 1, 2021 Cash $24,000,000 Dr
Notes Payable $24,000,000 Cr
2.
December 31, 2021 Interest Expense $960,000 Dr
Interest Payable $960,000 Cr
3.
May 30, 2022 Interest Expense $1,200,000 Dr
Interest Payable $1,200,000 Cr
June 1, 2022 Notes Payable $24,000,000 Dr
Interest Payable $2,160,000 Dr
Cash $26,160,000 Cr
Explanation:
1.
The issuance of note against cash results in a debit to cash and a credit to a liability in account for notes payable.
2.
The adjusting entry will be made in accordance to accrual principle that matches the revenues and expenses relating to a certain period and record them in their respective period. The interest on note for 4 months from September to December belongs to 2021 and will be recorded as an expense and a payable on 31 december.
The interest expense for 4 months is = 24000000 * 0.12 * 4/12 = $960000
3.
The interest for the remaining 5 months will be recorded on the last day of note on May 30.
The interest for 5 months is = 24000000 * 0.12 * 5/12 = $1200000
On June 1, the note and the interest payable on note both will be paid and will be debited to close them from the books and cash will be credited.
