Question

The following selected transactions relate to liabilities of United Insulation Corporation. United’s fiscal year ends on December 31.

2021

Jan.		13		Negotiated a revolving credit agreement with Parish Bank that can be renewed annually upon bank approval. The amount available under the line of credit is $30.0 million at the bank’s prime rate.
Feb.		1		Arranged a three-month bank loan of $6.5 million with Parish Bank under the line of credit agreement. Interest at the prime rate of 11% was payable at maturity.
May		1		Paid the 11% note at maturity.
Dec.		1		Supported by the credit line, issued $18.6 million of commercial paper on a nine-month note. Interest was discounted at issuance at a 10% discount rate.
		31		Recorded any necessary adjusting entry(s).

2022

Sept.

1

Paid the commercial paper at maturity.

Required:

Prepare the appropriate journal entries through the maturity of each liability. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round intermediate calculations. Enter your answers in whole dollars.)

Record a revolving credit agreement negotiated with Parish Bank that can be renewed annually upon bank approval. The amount available under the line of credit is $30.0 million at the bank’s prime rate.

Record a three-month bank loan of $6.5 million with Parish Bank under the line of credit agreement. Interest at the prime rate of 11% was payable at maturity.

Record the payment of the 11% note at maturity.

Record the issuance of $18.6 million of commercial paper on a nine-month note, supported by the credit line. Interest was discounted at issuance at a 10% discount rate.

Record necessary adjusting entry to accrue interest on December 31.

Record interest on commercial paper in 2022.

Record the repayment of commercial paper at maturity.

Answer 1

Answer
	Journal	Debit	Credit
	2021
13-Jan	No entry needed
01-Feb	Cash	6,500,000
	Bank Loan		6,500,000
01-May	Bank Loan	6,500,000
	Interest ($ 6,500,000 * 3/12* 11%)	178,750
	Cash		6,678,750
01-Dec	Cash	17,205,000
	Discount on Notes payable ( 18,600,000 * 9/12 * 10%)	1,395,000
	Note Payable		18,600,000
31-Dec	Interest Expense	155,000
	Discount on Note Payable ( $ 18,600,000 * 1/12*10%)		155,000
	2022
01-Sep	Note Payable	18,600,000
	Interest Expense	1,240,000
	Cash		18,600,000
	Discount on Note Payable ( 18,600,000*10%*8/12)		1,240,000

Answer 2

Just how it supposed to look with no numbers 1. No entry 2. Cash Notes payable 3. Notes payable Interest expense Cash 4. Cash Discount on notes payable Notes payable 5. Interest expense 155.00 Discount on notes payable 6. Interest expense 1240.00 Discount on notes payable 7. Notes payable Cash 18.6mil I did not put numbers cause they are all given just put in in the correct spot it’s easy