Answer: Please see explanatory column for answer.
Explanation:
No Journal entry
Date Amount and explanation Debit Credit
Jan 26 No entry No entry
Reason: this is because even though an agreement was reached in the negotiation,no transaction took place.
Journal to record loan from City Bank
Date Amount and explanation Debit Credit
March 1 Cash $350,000
Notes payable $350,000
Journal to record payment of loan with interest from City Bank from March - September.
Date Amount and explanation Debit Credit
September 1 Notes payable $350,000
Interest Expense $14,000
Cash $364,000
calculation: Interest = PxRXT= 350,000 X 8% X 6/12= $14,000
