Rebecca Fleming and Carrie Platt borrowed $12,000 on a 7-month, 9% note from Gopher State Bank to

Question:

Rebecca Fleming and Carrie Platt borrowed $12,000 on a 7-month, 9% note from Gopher State Bank to open their business, RC’s Coffee House. The money was borrowed on June 1, 2007, and the note matures January 1, 2008.
Instructions

(a) Prepare the entry to record the receipt of the funds from the loan.

(b) Prepare the entry to accrue the interest on June 30.

(c) Assuming adjusting entries are made at the end of each month, determine the balance in the interest payable account at December 31, 2007.

(d) Prepare the entry required on January 1, 2008, when the loan is paid back.

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For  book-img-for-question

Financial Accounting Tools For Business Decision Making

ISBN: 9780471730514

4th Edition

Authors: Paul D. Kimmel, Jerry J. Weygandt, Donald E. Kieso

Question Posted: