Question

On August 1, 2021. Trico Technologies, an aeronautic electronics company, borrows $20.1 million cash to expand operations. The loan is made by FirstBanc Corp. under a short-term line of credit arrangement. Trico signs a six-month, 9% promissory note. Interest is payable at maturity. FirstBanc Corp.'s year-end is December 31 Required: 1.-3. Record the necessary entries in the Journal Entry Worksheet below for FirstBanc Corp. (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field. Enter your answers in dollars, not in millions (i.e. 5 should be entered as 5,000,000).)

Answer 1

Solution:

Date	General Journal	Debit	Credit
Aug.1, 2021	Loan-Short Term	$         20,100,000
	Cash		$        20,100,000
	(To record issue of short term loan)
Dec. 31, 2021	Interest Receivables [20100000*9/100*5/12]	$               753,750
	Interest Revenue		$              753,750
	(To record interest revenue)
Jan.31, 2022	Cash	$         21,004,500
	Interest Receivables [20100000*9/100*5/12]		$              753,750
	Interest Revenue [20100000*9/100*1/12]		$              150,750
	Loan-Short Term		$        20,100,000
	(To record interest revenue along with collection of loan)