Question
Many businesses borrow money during periods of increased business activity to finance inventory and accounts receivable. Neiman Marcus is one of Americas most prestigious retailers.
Many businesses borrow money during periods of increased business activity to finance inventory and accounts receivable. Neiman Marcus is one of Americas most prestigious retailers. Each Christmas season, Neiman Marcus builds up its inventory to meet the needs of Christmas shoppers. A large portion of these Christmas sales are on credit. As a result, Neiman Marcus often collects cash from the sales several months after Christmas. Assume that on November 1, 2014, Neiman Marcus borrowed $5.8 million cash from Texas Capital Bank for working capital purposes and signed an interest-bearing note due in six months. The interest rate was 5 percent per annum payable at maturity. The accounting period ends December 31. |
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1. | Prepare the journal entry to record the note on November 1. (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 (i.e., 1,000,000 not 1.0).)
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