Question

Exercise 10-03 On June 1, Cullumber Company Ltd. borrows $72,000 from Acme Bank on a 6-month, $72,000, 4% note. The note matures on December 1. Prepare the entry on June 1. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit June 1 SHOW LIST OF ACCOUNTS LINK TO TEXT LINK TO VIDEO Prepare the adjusting entry on June 30. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit June 30 SHOW LIST OF ACCOUNTS LINK TO TEXT LINK TO VIDEO

Answer 1

Answer

--Journal entries

Date	Description	Debit	Credit
Jun-01	Cash	$72,000
	Notes Payable		$72,000
	(to record issuance)
Jun-30	Interest Expense ($72000 x 4% x 1/12)	$240
	Interest Payable		$240
	(to record accrued interest)
Dec-01	Notes Payable	$72,000
	Interest Payable ($72000 x 4% x 6/12)	$1,440
	Cash		$73,440
	(to record payment)

--Total Interest Expense = $ 72000 x 4% x 6 months/12 = $ 1,440