Dougald Construction Ltd. borrowed $350,000 from TD Bank on October 1, 2017, for a nine-month period;...
Dougald Construction Ltd. borrowed $350,000 from TD Bank on October 1, 2017, for a nine-month period; 6% interest is payable at maturity. Both companies have a December 31 year end and make adjusting entries annually.
For Dougald Construction, record (1) the receipt of the bank loan on October 1, 2017; (2) the accrual of interest on December 31, 2017; and (3) the payment of the loan on July 1, 2018.
Homework Answers
| Date | Account Title and Explanation | Debit | Credit | |
| October 1,2017 | Cash | $3,50,000.00 | ||
| Bank Loan Payable | $3,50,000.00 | |||
| ( Being Loan Received ) | ||||
| December 31,2017 | Interest Expenses | $5,250.00 | ||
| Interest Payable | $5,250.00 | |||
| ( Being Interest Recorded ) | ||||
| ( $ 350,000 * 6% *3 / 12) | ||||
| July 1,2018 | Interest Expenses | $10,500.00 | ||
| Interest Payable | $10,500.00 | |||
| ( Being Interest Recorded ) | ||||
| July 1,2018 | Bank Loan Payable | $3,50,000.00 | ||
| Interest Payable | $15,750.00 | |||
| Cash | $3,65,750.00 | |||
| ( Repayment of Bank Loan ) | ||||
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