Answer:
<u>when signing the note:</u>
cash 22,000,000
note payable 22,000,000
<u>accrued interest at december 31th, 2018</u>
interest expense 330,000 debit
interest payable 330,000 credit
payment of the note:
<u>payment of the note</u>
note payable 22,000,000
interest payable 330,000
interest expense 1,185,000
cash 23,485,000
Explanation:
adjusting entry:
principal x rate x time
22,000,000
rate 9% / 12 = 0.0075
months 2
We must express rate and time in the same metric, in this case, months
22,000,000 x 0.75 x 2 = 330,000 accrued interest
payment of the note:
22,000,000 x 0.75 x 9 = 1,485,000
already accrued 330,000
interest expense 1,185,000
