Question

On June 1, Swifty Company borrows $120,000 from First Bank on a 6-month, $120,000, 8% note. Prepare the entry on June 1. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit June 1 Prepare the adjusting entry 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 Prepare the entry at maturity (December 1), assuming monthly adjusting entries have been made through November 30. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit Dec. 1 What was the total financing cost interest expense)? Total financing costs

Answer 1

Jun-01	Cash	120000
	Notes payable		12000
Jun-30	Interest exp. ( 120000 * 8 % * 1/12 )	800
	Interest payable		800
Dec. 1	Interest payable	4800
	Notes payable	120000
	Cash		124800
	Total Financing cost = 120000 * 8% *6/12 =
	$ 4800