$03-$Ch$\mathrm{.}10-$Challenge Exercise $1$

LO $1$

Jake Anderson Company had the following transactions involving notes payable.

June $1,2022$ Borrows $$70,000$ from First National Bank by signing a $9-$month, $12\%$ note.

Dec. $1,2022$ Borrows $$90,000$ from Sycamore State Bank by signing a $3-$month, $10\%$ note.

Dec. $31,2022$ Prepares adjusting entries.

Mar. $1,2022$ Pays principal and interest to Sycamore State Bank.

Mar. $1,2022$ Pays principal and interest to First National Bank.

Instructions:

$($a$)$ Prepare journal entries for each of the transactions shown above.

$($b$)$ What effect do the $12/31/22$ entries have on assets, liabilities, and stockholders' equity.

$($c$)$ What amount of interest expense is reported in the $2014$ income statement and in the $2015$ income statement?