Question

E9-8 (Algo) Reporting Notes Payable and Calculating Interest Expense LO 9-3 South End is one of the world's most popular outdoor apparel companies. Assume that South End borrows $3.0 million from U.S. Bank and signs a note promising to pay back the $3.0 million in eight months, at which time South End also will pay any accrued interest. The interest rate on the note is 8%. Required: 1. Prepare the journal entry South End will record when it signs the note and receives the cash. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in whole dollars not in millions (i.e., 1,000,000 not 1.0).) View transaction list Journal entry worksheet Record the eight-month note with an interest rate of 8%. Note: Enter debits before credits. Transaction General Journal Debit Credit 01 Record entry Clear entry View general journal

Answer 1

(Amount in Millions) Debit Credit $30,00,000 $30,00,000 Transaction General Journal Cash Notes Payable (To record Notes Payable) Notes Payable Interest Expense [Note(0)] Cash (To record interest and notes payment) $30,00,000 $1,60,000 $31,60,000 Note (i) $30,00,000 Amount rate of interest Interest for 8 months [($3000000 x 8%)/12 x 8] 8% $1,60,000