Question

Problems -Stem Corporation borrowed SiO million cash on September 1 working capital for the year's production Stern issued a 6-month, 10% prom t he fiscal year Bank. Interest on the note is payable at maturity. The firm uses the payable at maturity. The firm uses the calendar year as the cash on September 1, 2018, to provide additional month, 10% promissory note to Second State Required: 1. Prepare all journal entries from issuance to maturity for journal entries. ance to maturity for Stern Corporation. There should be three (3)

Answer 1

Journal Entry

Date	Account Title	Debit	Credit
2018 Sept 1	Cash	10,000,000
	Note Payable		10,000,000
	(To Record Note Issue)
2018 Dec 31	Interest Expense	333,333
	Interest Payable		333,333
	(To Record interest accrued on Dec 31)
2019 March 1	Note Payable	10,000,000
	Interest Payable	333,333
	Interest Expense	166,667
	Cash		10,500,000
	(To record payement of note and interest at maturity)

Interest expense on Dec 31,2018

= Note Payable x Interest Rate x Time Period

=10,000,000 x 10% x 4/12

= $ 333,333

Interest Expense on March 1, 2019

= Note payable x Interest Rate x Time period

=10,000,000 x 10% x 2/12

= $ 166,667

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