INTEREST-BEARING NOTE USING T-ACCOUNTS. Fairborne Company borrowed $240,000 on a five-month, 7%, interest-bearing note on November 1, 19x5. Fairborne ends its fiscal year on December 31. The note was paid with interest on March 31, 19x6.

REQUIRED:

1. Prepare the adjusting entry in T-accounts for this note on December 31, 19x5.

2. Indicate how the note and the accrued interest would appear in the balance sheet at December 31, 19x5.

3. Prepare the entry in T-accounts to record the repayment of the note on March 31, 19x6.