Precision Castparts, a manufacturer of processed engine parts in the automotive and airline industries, borrows $40 million cash on October 1, 2015, to provide working capital for anticipated expansion. Precision signs a one-year, 8% promissory note to Midwest Bank under a prearranged short-term line of credit. Interest on the note is payable at maturity. Each firm has a December 31 year-end.

1-Prepare the journal entries on October 1, 2015, to record the issuance of the note.

Record the issuance of the note for Precision Castparts.

Record the issuance of the note for Midwest Bank.

2-Record the adjustment on December 31, 2015

Record the adjustment for interest for Precision Castparts.

Record the adjustment for interest for Midwest Bank.

3-Prepare the journal entry on September 30, 2016, to record payment of the notes payable at maturity. Record the repayment of the note at maturity for Precision Castparts. Record the receipt of cash at maturity for Midwest Bank.