Question

On October 1, Eder Fabrication borrowed $63 million and issued a nine-month, 10% promissory note. Interest was payable at maturity. Prepare the journal entry for the issuance of the note and the appropriate adjusting entry for the note at December 31, the end of the reporting period. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in whole dollars.) View transaction list Journal entry worksheet Record the issuance of the note. Note: Enter debits before credits. Transaction General Journal Debit Credit Record entry Clear entry View general journal

Answer 1

Solution

Transaction	General Journal	Debit	Credit
1	Cash	$ 63,000,000
	Notes payable		$ 63,000,000
	(To record issuance of notes payable)

.

Adjusting entry for interest expense accrued on note on December 31

Transaction	General Journal	Debit	Credit
2	Interest expense	$ 1,575,000
	Interest payable		$ 1,575,000
	(To record interest accrued)

Interest expense for 3 months will be accrued (63000000 x 10% x 3/12)