Natalie is thinking of repaying all amounts outstanding to her grandmother. Recall that Cookie Creations borrowed $2,000 on November 16, 2022, from Natalie’s grandmother. Interest on the note is 6% per year, and the note plus interest was to be repaid in 24 months. Recall that a monthly adjusting journal entry was prepared for the months of November 2022 (1/2 month), December 2022, and January 2023.

Instructions

a. Calculate the interest payable that was accrued since the amount was borrowed and recorded to July 31, 2023, assuming monthly adjusting entries were made.

b. Prepare the journal entry at August 31, 2023, to record one month’s accrued interest.

c. Natalie repays her grandmother on September 15, 2023 – 10 months after her grandmother extended the loan to Cookie Creations. Prepare the journal entry for the loan repayment.