Journal
Date |
Account Title and Explanation |
Debit |
Credit |
Nov 1, 2021 | Cash | 79,000,000 | |
Note payable | 79,000,000 | ||
(To record issue of note) | |||
Dec 31, 2021 | Interest expense | 1,580,000 | |
Interest payable | 1,580,000 | ||
(To record interest expense at year end) | |||
May 1, 2022 | Note payable | 79,000,000 | |
Interest payable | 1,580,000 | ||
Interest expense | 3,160,000 | ||
Cash | 83,740,000 | ||
(To record payment of note at maturity) |
Interest expense on Dec 31, 2021 = Note payable x Interest rate x time period
= 79,000,000 x 12% x 2/12
= $1,580,000
Interest expense on May 1, 2022 = Note payable x Interest rate x time period
= 79,000,000 x 12% x 4/12
= $3,160,000
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