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Precision Castparts, a manufacturer of processed engine parts in the automotive and airline industries, borrows $40.1 million cash on October 1, 2021, to provide working capital for anticipated expansion. Precision signs a one-year, 9% promissory note to Midwest Bank under a prearranged short-term line of credit. Interest on the note is payable at maturity. Each firm has a December 31 year-end.

Required:

Prepare the journal entries on October 1, 2021, to record the issuance of the note. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field. Enter your answers in dollars, not in millions. For example, $5.5 million should be entered as 5,500,000.)

Journal entry worksheet

• Record the issuance of the note by Precision Castparts.

Note: Enter debits before credits.

	Date General Journal Debit Credit October 01, 2021

Journal entry worksheet

• Record the acceptance of the note by Midwest Bank.

Note: Enter debits before credits.

	Date General Journal Debit Credit October 01, 2021

Record the adjustments on December 31, 2021, for (a) Precision Castparts and (b) Midwest Bank. (Do not round intermediate calculations. If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field. Enter your answers in dollars, not in millions. For example, $5.5 million should be entered as 5,500,000.)

Journal entry worksheet

• Record the adjusting entry for interest for Precision Castparts.

Note: Enter debits before credits.

	Date General Journal Debit Credit December 31, 2021

Journal entry worksheet

• Record the adjusting entry for interest for Midwest Bank.

Note: Enter debits before credits.

	Date General Journal Debit Credit December 31, 2021

Prepare the journal entries on September 30, 2022, to record payment of the notes payable at maturity. (Do not round intermediate calculations. If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field. Enter your answers in dollars, not in millions. For example, $5.5 million should be entered as 5,500,000.)

Journal entry worksheet

• Record the repayment of the note at maturity for Precision Castparts.

Note: Enter debits before credits.

	Date General Journal Debit Credit September 30, 2022

Journal entry worksheet

• Record the receipt of cash at maturity for Midwest Bank.

Note: Enter debits before credits.

	Date General Journal Debit Credit September 30, 2022

Answer 1

In the Books of Precision Castparts Date Oct 1, 2021 Credit Account Title Cash Notes Payable (To record amount borrowed from bank) Debit $4,01,00,000 $4,01,00,000 $9,02,250 Dec 31, 2021 Interest Expense Interest Payable (To record accrual of interest expense) [($40100000 x 9%)/12 x 3] $9,02,250 Sep 30, 2022 Interest Expense $27,06,750 $9,02,250 $4,01,00,000 Interest Payable Notes Payable Cash (To record repayemt of note at maturity) [($40100000 x 9%)/12 x 9] $4,37,09,000 In the Books of Midwest Bank Date Oct 1, 2021 Account Title Notes Receivable Cash (To record amount given to Precision Castparts) Debit $4,01,00,000 Credit $4,01,00,000 Dec 31, 2021 Interest Receivable $9,02,250 Interest Income (To record accrual of interest income) [($40100000 x 9%)/12 x 3] $9,02,250 Sep 30, 2022 Cash $4,37,09,000 Interest Receivable Interest Income Notes Receivable (To record receipt of cash at maturity) [($40100000 x 9%)/12 x 9] $9,02,250 $27,06,750 $4,01,00,000