Accounting for notes payable (Learning Objective 2) 5–10 min.

On May 15, Lacico borrowed some money on a 4-month note. The interest rate on the note was 8%. At the time the note was due the amount of interest owed was $1,200.

Requirements 1. Determine the amount borrowed by Lacico.

2. Assume the amount borrowed was $54,000. What was the interest rate if the amount of interest owed was $900?

3. Prepare the entry for the initial borrowing and the repayment in point (1).

AppendixLO1