Question

Windsor, Inc borrows $61,200 on July 1 from the bank by signing a $61,200,6%, 1-year note payable. 

(a) Prepare the journal entry to record the proceeds of the note.

(b) Prepare the journal entry to record the accrued interest at December 31, assuming adjusting entries are made only at the end of the year. 

Answer 1

a.

Date	Account Titles	Debit	Credit
Jul-01	Cash	$        61,200
	Notes Payable		$              61,200

b.

Date	Account Titles	Debit	Credit
Dec-31	Interest Expense	$          1,836		=61200*6%*6/12
	Interest Payable		$                1,836