7.5Accounting for a Note Payable. Assume that on December 31, 2017, The Coca-Cola Company borrows money from a consortium of banks by issuing a $900 million promissory note. The note matures in four years on December 31, 2021, and pays 3% interest once a year on December 31. The consortium transfers $867.331 million (rounded) to Coca-Cola, implying that the bank expects a 4% return on the note.

7.9 Convertible Preferred Stock. Assume that John Deere Co. issues 2,000 shares of $100 par, 6% convertible preferred stock for $105 per share. Shareholders have the right to exchange each share of convertible preferred stock for five shares of $10 par common stock. Use the template below to show the financial statement effects of the following events.

Answer The following:

1.Issuance of the preferred stock

2. Declaration and payment of the cash dividend on the preferred stock

3. Conversion of the preferred stock to common stock when the market value of the common stock is $29 per share

4. Using the effective interest method, complete the template below to show the financial statement effects of (1) the December 31, 2017, issue; (2) the December 31, 2018, interest payment and interest expense accrual; and (3) the December 31, 2019, interest payment and interest expense accrual.

Assets Liabilities Shareholders' Equity OCTADORE Journal entry