Question

On August 1, 2021, Trico Technologies, an aeronautic electronics company, borrows $19.4 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. 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).)

1. Record the acceptance of note.

2. Record the adjusting for interest.

3. Record the receipt of cash at maturity.

Answer 1

Date	Accounts	Debit	Credit
August 1, 2021	Notes receivables	19400000
	cash		19400000
December 31, 2021	Interest receivables(19400000*9%*5/12)	727500
	interest revenue		727500
Jan 31, 2022	Cash	20273000
	Notes receivables		19400000
	Interest receivables		727500
	Interest revenue(19400000*9%*1/12)		145500