Question

On December 1, Gilman Corporation borrowed $20,000 on a 90-day, 6% note. Prepare the entries to record the issuance of the note, the accrual of interest at year end, and the payment of the note. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Answer 1

Answer:

Please see below the Journal entries required for the Gilman Corporation for the amount borrowed.

Explanation:

Date: December 1

Debit: Cash $20,000

          Credit: Notes Payable $20,000

To record Issuance of the note.

Date: December 31

Debit: Interest Expense ($20,000 x 0.06 x 30/360)  $100

           Credit: Interest Payable $100

To record Accrual Interest at the year end.

Date: March 1

Debit: Note Payable  $20,000

          Interest Payable $100

          Interest Expense ($20,000 x 0.06 x 60/360) $200

          Credit: Cash $20,300

To record Payment of the note.