Note Computations and Entries (Straight Line)

On January 1, 2024, Benton Corporation borrowed $1,090,000 with a 10-year, 8.75% note, interest payable semiannually on June 30 and December 31. Cash in the amount of $1,075,500 was received when the note was issued.

Required:

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1. Prepare the necessary journal entry at January 1, 2024. If an amount box does not require an entry, leave it blank.

2024 Jan. 1	CashInterest ExpenseInterest PayableNotes PayablePremium on Notes Payable
	Discount on Notes PayableInterest ExpenseInterest PayableNotes PayablePremium on Notes Payable
	Discount on Notes PayableInterest ExpenseInterest PayableNotes PayablePremium on Notes Payable
	Record issuance of notes at discount

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2. Prepare the necessary journal entry at June 30, 2024. If an amount box does not require an entry, leave it blank. If required, round amounts to the nearest dollar.

2024 June 30	CashDiscount on Notes PayableInterest ExpenseInterest PayableNotes Payable
	Discount on Notes PayableInterest ExpenseInterest PayableNotes PayablePremium on Notes Payable
	Notes PayableCashInterest ExpenseInterest PayablePremium on Notes Payable
	Record interest expense

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3. Prepare the necessary journal entry at December 31, 2024. If an amount box does not require an entry, leave it blank. If required, round amounts to the nearest dollar.

2024 Dec. 31	CashDiscount on Notes PayableInterest ExpenseInterest PayableNotes PayablePremium on Notes Payable
	Discount on Notes PayableInterest ExpenseInterest PayableNotes PayablePremium on Notes Payable
	CashInterest ExpenseInterest PayableNotes PayablePremium on Notes Payable
	Record interest expense

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4. Determine the carrying amount of this note at the end of the fifth year (December 31, 2028). $fill in the blank 435259fa6012f99_1

Entries for and Financial Statement Presentation of a Note

Griddley Company borrowed $82,000 from the East Salvador Bank on February 1, 2023, on a 3-year, 7.2% note. Interest is paid annually on January 31.

If required, round amounts to the nearest dollar.

Required:

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1. Record the borrowing transaction in Griddleys journal. If an amount box does not require an entry, leave it blank.

2023 Feb. 1	Accounts PayableCashInterest ExpenseInterest PayableNotes PayableCash
	Accounts PayableCashInterest ExpenseInterest PayableNotes PayableNotes Payable
	Record issuance of notes at par

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Feedback

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

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

2023 Dec. 31	Accounts PayableCashInterest ExpenseInterest PayableNotes PayableInterest Expense
	Accounts PayableCashInterest ExpenseInterest PayableNotes PayableInterest Payable
	Record interest expense
2024 Dec. 31	Accounts PayableCashInterest ExpenseInterest PayableNotes PayableInterest Expense
	Accounts PayableCashInterest ExpenseInterest PayableNotes PayableInterest Payable
	Record interest expense

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3. 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.

2024 Jan. 31	Accounts PayableCashInterest ExpenseInterest RevenueNotes PayableCash
	Accounts PayableCashInterest PayableInterest RevenueNotes PayableInterest Payable
	CashInterest ExpenseInterest PayableInterest RevenueNotes PayableNotes Payable
	Record interest expense and interest payment

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4. Indicate how the note and associated interest would be presented in Griddleys December 31, 2024, balance sheet.

Current liabilities:
CashInterest expenseInterest payableNotes payableInterest expense	$Interest expense
Long-term liabilities:
Interest expenseInterest payableNotes payable 8.6%, due in 2026Notes receivable 8.6%, due in 2026Notes receivable 8.6%, due in 2026	Notes receivable 8.6%, due in 2026

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5. Prepare the necessary journal entries to record the repayment of the note and the last years interest payment on January 1, 2026. If an amount box does not require an entry, leave it blank.

2026 Jan. 31	Accounts PayableCashInterest ExpenseInterest RevenueNotes PayableCash
	Accounts PayableCashInterest PayableInterest RevenueNotes PayableInterest Payable
	Accounts PayableCashInterest ExpenseInterest PayableNotes PayableNotes Payable
	Record interest expense and interest payment
2026 Jan. 31	Accounts PayableCashInterest ExpenseInterest PayableNotes PayableCash
	Accounts PayableCashInterest ExpenseInterest PayableNotes PayableNotes Payable
	Record repayment of note principal