PROBLEM #1

On March 1, of the current year the Johnson Company negotiated a, 12%, 1-year, $100,000 note with Low Mountain Savings and Loan.

Show the effects on the accounting equation, by account title and record the journal entry:

1. At the origination of the loan.

Assets = Liabilities + Equity

2. To record year-end interest.

Assets = Liabilities + Equity

3. At the maturity of the note.

Assets = Liabilities + Equity

PROBLEM #2