Hot Springs Marine borrowed $20 million cash on December 1, 2024, to provide working capital for year-end inventory. Hot Springs Marine issued a 4-month, 9% promissory note to Third Bank under a prearranged short-term financing arrangement. Interest on the note was payable at maturity. Each firm's fiscal period is the calendar year.

Required:

1. Prepare the journal entries to record (a) the issuance of the note by Hot Springs Marine and (b) Third Bank's receivable on December 1, 2024.
2. Prepare the journal entries by both firms to record all subsequent events related to the note through March 31, 2025.
3. Suppose the face amount of the note was adjusted to include interest (a noninterest-bearing note) and 9% is the bank's stated "discount rate." Prepare the journal entries to record the issuance of the noninterest-bearing note by Hot Springs Marine on December 1, 2024.
4. What would be the effective interest rate?

1. Prepare the journal entries required for Hot Springs Marine. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in whole dollars not in millions.

Record the issuance of the 4-month, 9% $20 million cash note.

Record the accrued interest on December 31, 2025.

Record the settlement of the note at maturity.

Prepare the journal entries required for Third Bank. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in whole dollars not in millions.

Record the issuance of the 4-month, 9% $20 million cash note.

Record the accrued interest on December 31, 2025.

Record the settlement of the note at maturity.

Suppose the face amount of the note was adjusted to include interest (a noninterest-bearing note) and 9% is the bank's stated "discount rate." Prepare the journal entries to record the issuance of the noninterest-bearing note by Hot Springs Marine on December 1, 2024. What would be the effective interest rate? Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in whole dollars not in millions.

Record the issuance of $20 million, 4-month, non-interest-bearing note issued at a 9% discount rate on December 1, 2024.

Record the interest expense on the note for the year ending December 31, 2024.

Record the interest expense on the note for the year ending March 31, 2025.

Record the settlement of note payable at maturity.

What would be the effective interest rate? Note: Round your percentage answer to 2 decimal places.