Question

Kelly Jones and Tami Crawford borrowed $ 12,000 on a  7-month,  6% note from Gem State Bank to open their business, JC’s Coffee House. The money was borrowed on June 1, 2017, and the note matures January 1, 2018.

Prepare the entry to record the receipt of the funds from the loan. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Date	Account Titles and Explanation	Debit	Credit
June 1	enter an account title to record the receipt of the funds from the loan on June 1	enter a debit amount	enter a credit amount
	enter an account title to record the receipt of the funds from the loan on June 1	enter a debit amount	enter a credit amount

eTextbook and Media

List of Accounts

Prepare the entry to accrue the interest on June 30. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Date	Account Titles and Explanation	Debit	Credit
June 30	enter an account title to accrue the interest on June 30	enter a debit amount	enter a credit amount
	enter an account title to accrue the interest on June 30	enter a debit amount	enter a credit amount

eTextbook and Media

List of Accounts

Assuming adjusting entries are made at the end of each month, determine the balance in the interest payable account at December 31, 2017.

Balance in interest payable account

$ enter the Balance in interest payable account in dollars

eTextbook and Media

List of Accounts

Prepare the entry required on January 1, 2018, when the loan is paid back. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Date	Account Titles and Explanation	Debit	Credit
Jan. 1, 2018	enter an account title on January 1	enter a debit amount	enter a credit amount
	enter an account title on January 1	enter a debit amount	enter a credit amount
	enter an account title on January 1	enter a debit amount

Answer 1

Journal entries :

date	account and explanation	debit	credit
June 1	Cash	12000
	Notes payable		12000
	(To record borrow)
June 30	Interest expense (12000*6%*1/12)	60
	Interest payable		60
	(To record accured interest)

Balance in interest payable account = 60*7 = $420

Journal entry

Date	account and explanation	debit	credit
Jan 1,2018	Notes payable	12000
	Interest payable	420
	Cash		12420
	(To record loan paid back)