Question

The following 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 $25.0 million at the bank’s prime rate.
Feb.		1		Arranged a three-month bank loan of $4.2 million with Parish Bank under the line of credit agreement. Interest at the prime rate of 14% was payable at maturity.
May		1		Paid the 14% note at maturity.
Dec.		1		Supported by the credit line, issued $15.9 million of commercial paper on a nine-month note. Interest was discounted at issuance at a 13% 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

solution Date I Account title and Explanation I Delht I Gredet 2021 Jan 13 febi 4200000 420000D No Entry cash Notes payable Interest experse [4200000X14% X 3/12] Notes payable cash May 1 147000 4200000 4347000 Dec 1. اهم 14349750 1550250 Discount on Notes payable [15900000 X 13%89/12] Notes payable 15900000 Dec 31 172250 Interest expense C 15900000 X13% X 1/12] Discount on note 172250 2022 sept 1 1378000 Interest expense [ 15900000 X 13% X 8/12] Discount on Notes payable Notes payable cash 1378000 15900000 15900000