Question

On August 1, 2021, Trico Technologies, an aeronautic electronics company, borrows $19.6 million cash to expand operations. The loan is made by FirstBanc Corp. under a short-term line of credit arrangement. Trico signs a six-month, 9% promissory note. Interest is payable at maturity. FirstBanc Corp.'s year-end is December 31. Required: 1.-3. Record the necessary entries in the Journal Entry Worksheet below for FirstBanc Corp. (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field. Enter your answers in dollars, not in millions (i.e. 5 should be entered as 5,000,000).) View transaction list Journal entry worksheet < 1 2 3 Record the acceptance of note. Note: Enter debits before credits. General Journal Debit Credit Date August 01, 2021 Record entry View general journal Clear entry

Answer 1

Date August 1, General Journal Cash Notes Payable (To record the acceptance of note) Debit I credit $19,600,000 $19,600,000 2021 Debit Credit Date December 31) 2021 & 735,000 General Journal Interest Expense Interest Payable (to record the adjusting for interest) & 735,000 Debit credit Date January 31, 2022 General Journal Notes Payable Interest Payable Interest Expense $19,600,000 $ 135,000 $ 147,000 Cash $ 20,482,000 (To record the receipt of cash at maturity Calculation : camber 31, 2021 : Interest Expense 9% x S months = - $ 19,600,000 x $ 735,000

January 31, 20222 Interest Payable 5 months = = $ 19,600,000 x 9% x $ 735,000 1 month Interest Expense = = $ 19,600,000 x 9% x $ 147,000