Question
Schembri Manufacturing borrowed $75,000 from the bank on November 1, 2019, and must repay the loan principal and interest on February 1, 2020. The bank
Schembri Manufacturing borrowed $75,000 from the bank on November 1, 2019, and must repay the loan principal
and interest on February 1, 2020. The bank charges an annual interest rate of 6% on the loan.
a) Prepare the adjusting entry to accrue the interest on December 31, which is Schembri Manufacturing's yearend. Schembri Manufacturing has not accrued any interest before December 31, 2019. b) Record the payment of loan principal and interest on February 1, 2020.
You are welcome to put in the initial entry as well to help you with the question but only the adjustments on Dec 31 and payment on Feb 1 will be marked.
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Ethical Obligations and Decision Making in Accounting Text and Cases
Authors: Steven M. Mintz, Roselyn E. Morris
5th edition
1259969460, 73403997, 1260480852, 978-1259969461
