MileHi Mountain Bikes markets mountain-bike tours to clients vacationing in transactions; show balance various locations in the mountains of Colorado. In preparation for the upcoming sum- (eg S ee mer biking season, MileHi entered into the following transactions related to notes payable.

Mar. 1 Purchased Mongoose bikes for use as rentals by issuing an $8,000, 9% note payable that is due in 3 months.

Mar. 31 Apr 1 Recorded accrued interest for the Mongoose note.
Issued a $20,000 note for the purchase of mountain property on which to build bike trails. The note bears 12% interest and is due in 9 months.
Recorded accrued interest for the Mongoose note and the land note.
Issued a note to Telluride National Bank for $15,000 at 6%. The funds will be used for working capital for the beginning of the season; the note is due in 4 months.
Recorded accrued interest for all three notes.
Paid principal and interest on the Mongoose note.
Recorded accrued interest for the land note and the Telluride Bank note.
Apr. 30 May 1 May 31 June 1 June 30 Instructions

(a) Prepare journal entries for the transactions noted above.

(b) Post the above entries to the Notes Payable, Interest Payable, and Interest Expense accounts. (Use T accounts.)

(c) Assuming that MileHi’s year-end is June 30, show the balance sheet presentation of notes payable and interest payable at that date.

(d) How much interest expense relating to notes payable did MileHi incur during the year?