Question

Kelly Jones and Tami Crawford borrowed $10,500 on a 7-month, 8% 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 Cash 10500 Notes Payable 10500 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 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 $ 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

Answer 1

Date	Account Titles and Description	Debit ($)	Credit ($)
1-Jun-2017	Cash	10,500
	Notes Payable		10,500
30-Jun-2017	Interest Expense [(10,500 * 8% )/ 12]	70
	Interest Payable		70
Balance in Interest Payable Account on Dec 31,2017 = 70 * 7 = $490
1-Jan-2018	Notes Payable	10,500
	Interest Payable	490
	Cash		10,990