On October 1, 2019, Arena Craft Boat Company borrowed $140,000 from Old National Bank, by signing a one year note payable with an annual interest rate of 6%. The note payable, plus 12 months of interest, is due in full on October 1, 2020.

Required

Prepare journal entries below associated with the note payable on the books of Arena Craft Boat Company.

(a) Prepare the journal entry on October 1,2019.

(b) Prepare the adjusting entry necessary on December 31, 2019 in order to prepare the year-end financial statements. Assume interest accrual adjusting entries have not yet been made during 2019.

(c) Prepare the journal entry to record payment of the note at maturity on October 1, 2020.