Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Many businesses borrow money during periods of increased business activity to finance inventory and accounts receivable. For example, Mitt builds up its inventory to meet

Many businesses borrow money during periods of increased business activity to finance inventory and accounts receivable. For example, Mitt builds up its inventory to meet the needs of retailers selling to Christmas shoppers. A large portion of Mitt's sales are on credit. As a result, Mitt often collects cash from its sales several months after Christmas. Assume on November 1, 2018, Mitt borrowed $7.9 million cash from Metropolitan Bank and signed a promissory note that matures in six months. The interest rate was 8.50 percent payable at maturity. The accounting period ends December 31.

Required:

  1. 1, 2 & 3. Prepare the required journal entries to record the note on November 1, 2018, interest on the maturity date, April 30, 2019, assuming that interest has not been recorded since December 31, 2018. (Enter your answers in whole dollars. If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)

image text in transcribed

X Answer is not complete. No Date General Journal Debit Credit 1 Nov 01, 2018 Cash 7,900,000 Notes Payable (short-term) 7,900,000 2 Dec 31, 2018 94,800 X Interest Expense Interest Payable 94,800 X 3 Apr 30, 2019 Notes Payable (short-term) Interest Payable Interest Expense

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Auditing A Practical Manual For Auditors

Authors: Lawrence Robert Dicksee

1st Edition

1360462546, 978-1360462547

More Books

Students also viewed these Accounting questions

Question

Briefly describe three types of nonsampling error.

Answered: 1 week ago

Question

=+a) Find the equation of the regression line.

Answered: 1 week ago

Question

=+vii. Bullet points to emphasize important ideas.

Answered: 1 week ago