Question

Q1- Castle National bank agrees to lend SR 100,000 on march1, 2017, to land pace company. If landscape signs a SR 100,000, 6%, four- month note. On the due date payment made with interest. Pass journal entries.

Q2 – Al Rajhi bank agrees to lend SR 200,000 in March 1, 2017, to Aramco Company. If Aramco signs a SR 200,000 6%, for semi-annual note. Pass the journal entries on interest and note.

Q3- Al Rajhi bank agrees to lend SR 150,000 on March1, 2017, to Aramco Company. If Armco signs a SR 150,000 6%, for monthly note. Pass journal entries.

Q4- Hindalco issues a SR 102000, four- month, Zero-interest bearing note to Arab National Bank. The present value of the note is SR 100,000. On the due date payment is made on notes.

Q5- Borrowed SR 50,000 from the Shore Bank by signing a 12-month, zero-interest-bearing note of SR 54,000. Pass the journal entries of note issue and adjusting of interest with discount.

Answer 1

Answer-1:
Account Name	Debit	Credit
Cash	100,000
Notes payable		100,000
(to record cash received)
Interest expense (100,000 * 6% * 4/12)	2,000
Interest payable		2,000
(to recognize interest expense)
Notes payable	100,000
Interest payable	2,000
Cash		102,000
(to record payment of note and accrued interest)
Answer-2:
Account Name	Debit	Credit
Cash	200,000
Notes payable		200,000
(to record cash received)
Interest expense	6,000
Interest payable		6,000
(to recognize interest expense)
Notes payable	200,000
Interest payable	6,000
Cash		206,000
(to record payment of note and accrued interest)
Answer-3:
Account Name	Debit	Credit
Cash	150,000
Notes payable		150,000
(to record cash received)
Interest expense	750
Interest payable		750
(to recognize interest expense)
Notes payable	150,000
Interest payable	750
Cash		150,750
(to record payment of note and accrued interest)
Answer-4:
Account Name	Debit	Credit
Cash	100,000
Discount on notes payable	2,000
Notes payable		102,000
Interest expense (2,000 / 4)	500
Discount on notes payable		500
Notes payable	102,000
Cash		102,000