Perez Company borrowed $60,000 from the First National Bank on April 1, 2008, on a three-year, 8.7 percent note. Interest is paid annually on March 31.

Required:

1. Record the borrowing transaction in Perez’s journal.

2. Prepare the adjustments made at December 31, 2008 and 2009.

3. Prepare the necessary journal entry to recognize 2008 interest to date and the first interest payment on March 31, 2009.

4. Indicate how the note and associated interest would be presented in Perez’s December

31, 2009, balance sheet.

5. Prepare the necessary journal entry to record the repayment of the note and the last year’s interest on March 31, 2011.