Question

 Keesha Co. borrows $295,000 cash on December 1 of the current year by signing a 180-day, 9%, $295,000 note.

 1. On what date does this note mature?

 2.& 3. What is the amount of interest expense in the current year and the following year from this note?

 4. Prepare journal entries to record (a) issuance of the note, (b) accrual of interest on December 31, and (c) payment of the note at maturity.

Answer 1

	Keesha Co.
Req 1	Maturity date	30-May
Req 2 & 3		Total Through Maturity	Interest Expense	Interest Expense
			Current Year	Following Year
	Principal	295,000	295,000	295,000
	Rate (%)	9%	9%	9%
	Time	180	30	150
	Total Interest	13,275	2,213	11,063
Calculation	Total Interest	=295,000*9%*180/360	=295,000*9%*30/360	=295,000*9%*150/360
Req 4
No.	Transaction	General Journal	Debit	Credit
a	Issuance of note	Cash	295,000
		Notes Payable		295,000
b	Accrual of Interest	Interest Expense	2,213
		Interest Payable		2,213
c	Payment of note	Notes Payable	295,000
		Interest Payable	2,213
		Interest Expense	11,063
		Cash		308,275