Entries for and Financial Statement Presentation of a Note

Griddley Company borrowed $$73,000$ from the East Salvador Bank on February $1,2023,$ on a $3-$year, $7\mathrm{.}2\%$ note. Interest annually on January $31.$

If required, round amounts to the nearest dollar.

Required:

Record the borrowing transaction in Griddley's journal. If an amount box does not require an entry, leave it blank.

$2023$ Feb. $1$

Record issuance of notes at par

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When bonds are issued, any premium or discount is recorded in a separate valuation account.

Prepare the adjusting entries made at December $31,2023$ and $2024.$ If an amount box does not require an entry, leave it blank.

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Interest expense is matched to the period it was incurred. Any premium or discount is amortized to interest expense. Consider that interest is not paid on December $31$st$.$

Prepare the necessary journal entry to recognize the first interest payment on January $31,2024.$ If an amount box does not require an entry, leave it blank.

Record interest expense and interest payment

Indicate how the note and associated interest would be presented in Griddley's December $31,2024,$ balance sheet.

Griddley Company

Balance Sheet $($partial$)$

December $31,2024$

Current liabilities:

Interest payable $$

Long$-$term liabilities:

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$4.$ Discount and premium accounts are valuation accounts.

$5.$ Prepare the necessary journal entries to record the repayment of the note and the last year's interest payment on January $12026.$ If an amount box does not require an entry, leave it blank.

$2026$ Jan. $31$

Record interest expense and interest payment

$2026$ Jan. $31$

Interest Expense $x$

Interest Payable

Record repayment of note principal