Entries for and Financial Statement Presentation of a Note}

Gekas Company borrowed \(\$ 200,000\) from the Royal Bank on February 1, 2018, on a three-year, \(8.6 \%\) note. Interest is paid annually on February 1.

\section*{Required:}

1. Record the borrowing transaction in Gekas's journal.

2. Prepare the adjusting entries made at December 31, 2018 and 2019.

3. Prepare the necessary journal entry to recognize the first interest payment on February 1, 2019 (round to the nearest dollar).

4. Indicate how the note and associated interest would be presented in Gekas's December 31, 2019, statement of financial position.

5. Prepare the necessary journal entries to record the repayment of the note and the last year's interest payment on February 1, 2021.

\section*{OBJECTIVE 2 Problem