Answer and Explanation:
The journal entries are shown below
1. Cash Dr $50,500
To Note payable $50,500
(Being the amount borrowed is recorded)
2. Cash Dr $61,200
To Note payable $61,200
(Being the amount borrowed is recorded)
3. Interest expense $2,020
To Interest payable $2,020
(Being the interest expense is recorded)
The computation is shown below:
= $50,500 × 8% × 6 months ÷ 12 months
= $2,020
4. Interest expense $612
To Interest payable $612
(Being the interest expense is recorded)
The computation is shown below:
= $61,200 × 6% × 2 months ÷ 12 months
= $612
5. Note payable $61,200
Interest expense $306
Interest payable $612
To Cash $62,118 ($61,200 + $918)
(Being the principal and the interest is recorded)
= $61,200 × 6% × 3 months ÷ 12 months
= $2,020
5. Note payable $50,500
Interest expense $1,010
Interest payable $2,020
To Cash $62,118 ($50,500 + $3,030)
(Being the principal and the interest is recorded)
= $50,500 × 8% × 9 months ÷ 12 months
= $3,030
