Punjab Company borrowed $100,000 on October 5, 2019 by issuing a note payable for 150 days...
Punjab Company borrowed $100,000 on October 5, 2019 by issuing a note payable for 150 days at 10%. Acme has a calendar year end and does not make reversing entries.
REQUIRED:
Prepare the following journal entries:
1. The issuance of the note on October 5, 2019
2. Adjusting entry on December 31, 2019
3. The payment of the note on __________?
Homework Answers
1. The entry would be
| Debit | Credit | |
| Cash | 100,000 | |
| Note payable | 100,000 |
2. The entry would be
| Debit | Credit | |
| Interest expense | 2,417 | |
| Interest payable (100,000*10%*87/360) | 2,417 |
3. The payment of the note on
= October 5 + 150 days
= March 3, 2020
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