Question

Keesha Co. borrows $200,000 cash on November 1, 2017, by signing a 120-day, 10% note with a face value of $200,000. 1. On what date does this note mature? (Assume that February has 28 days) O March 27, 2018. O March 28, 2018. O March 29, 2018. March 30, 2018. O March 01, 2018 2. & 3. What is the amount of interest expense in 2017 and 2018 from this note? (Use 360 days a year. Round final answers to the nearest whole dollar.) Total through maturity Interest Interest Expense 2017 Expense 2018 Principal Rate(%) Time Total interest

Answer 1

1) Maturity date = Nov 1+120 days = 1 March

So answer is e) March 1,2018

2) Table

	Total through maturity	Interest expense 2017	Interest expense 2018
Principal	200000	200000	200000
Rate	10%	10%	10%
Time	120/360	60/360	60/360
Total interest	6667	3333	3334

Journal entry

No	General Journal	Debit	Credit
a	Cash	200000
	Notes payable		200000
b	Interest expense	3333
	Interest payable		3333
c	Notes payable	200000
	Interest payable	3333
	Interest expense	3334
	Cash		206667