Question

Eskimo Joe's, designer of the world's second best-selling T-shirt (just behind Hard Rock Cafe), borrows $20.1 million cash on November 1, 2021. Eskimo Joe's signs a six-month, 7% promissory note to Stillwater National Bank under a prearranged short-term line of credit. Interest on the note is payable at maturity. Each firm has a December 31 year-end. Problem 8-2B Part 3 3. Prepare the journal entry on April 30, 2022, to record payment of the notes payable at maturity. (Do not round intermediate calculations. If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field. Enter your answers in dollars, not in millions. For example, $5.5 million should be entered as 5.500,000.) Answer is not complete. General Journal NO Credit Date April 30, 2022 Debit 20,100,000 Notes Payable Interest Expense Interest Payable 234,500 234,500 April 30, 2022 20,334,500 Cash Accounts Receivable

Answer 1

Answer:

3.)

Date	Particulars	Debit ($)	Credit ($)
30 April 2022	Notes Payable	$20,100,000
	Interest Payable	$234,500
	Interest Expense	$469,000
	Cash		$20,803,500
	(To record repayment of notes payable on maturity)
30 April 2022	Cash	$20,803,500
	Notes Receivable		$20,100,000
	Interest Receivable		$234,500
	Interest Revenue		$469,000
	(To record receipt of notes receivables on maturity)

Working Notes:

(Amount on notes payable x Interest Rate x Fraction of year) = $20,100,000 x 7% x 2/12
=$234,500
(Amount on notes payable x Interest Rate x Fraction of year) = $20,100,000 x 7% x 4/12
=$469,000