Question

ine tollowing selected transactions relate to liabilities of United Insulation Corporation. United's fiscal year ends on December 31. 2021 Jan. 13 Negotiated a revolving credit agreement with Parish Bank that can be renewed annually upon bank approval. The amount available under the line of credit is $30.5 million at the bank's prime rate. Feb. 1 Arranged a three-month bank loan of $7.8 million with Parish Bank under the line of credit agreement. Interest at the prime rate of 12 was payable at maturity. May 1 Paid the 121 note at maturity. Dee. 1 Supported by the credit line, issued $18.0 million of commercial paper on a nine-month note. Interest was discounted at issuance at a 110 discount rate. 31 Recorded any necessary adjusting entry(s). 2022 Sept. 1 Paid the commercial paper at maturity. Required: Prepare the appropriate journal entries through the maturity of each liability. (If no entry is required for a transaction/event, select "No journal entry required in the first account field. Do not round intermediate calculations. Enter your answers in whole dollars.)

Answer 1

Answer:

Date	Account Title	Debit($)	Credit($)
	No Entry for Jan. 13
2021, Feb 1	Cash A/c	78,00,000
	12% Note Payable A/c		78,00,000
	(Recording of Note Payable)
May-01	10% Note Payable A/c	78,00,000
	Interest Expenses A/c(78,00,000*12%*3/12)	2,34,000
	Cash A/c		80,34,000
	(Recording of Repayment of Loan)
Dec-01	Cash A/c	1,65,15,000
	Discount on note payable A/c(18000000*11%9/12)	14,85,000
	Note Payable A/c		1,80,00,000
	(Recording of Issue of Note)
Dec-31	Interest Expenses A/c((18000000*11%1/12)	1,65,000
	Discount on note payable A/c		1,65,000
	(Adjusting Entry for Interest )
2022
2022 Sep1	Interest Expenses A/c	13,20,000
	Discount on note payable A/c		13,20,000
2022 Sep1	Note Payable A/c	1,80,00,000
	Cash A/c		1,80,00,000
	(Recording of repayment of Note)