On May 15, Maranga’s Outback Clothiers borrowed some money on a 4-month note to provide cash during the slow season of the year. The interest rate on the note was 7%. At the time the note was due, the amount of interest owed was $294.

Instructions

(a) Determine the amount borrowed by Maranga’s.

(b) Assume the amount borrowed was $18,500. What was the interest rate if the amount of interest owed was $740?

(c) Prepare the entry for the initial borrowing and the repayment for the facts in part

(@)e