Question
The following selected transactions relate to liabilities of United Insulation Corporation. Uniteds fiscal year ends on December 31. 2021 Jan. 13 Negotiated a revolving credit
The following selected transactions relate to liabilities of United Insulation Corporation. Uniteds fiscal year ends on December 31.
2021
Jan. | 13 | Negotiated a revolving credit agreement with Parish Bank that can be renewed annually upon bank approval. The amount available under the line of credit is $30.5 million at the banks prime rate. | ||
Feb. | 1 | Arranged a three-month bank loan of $7.8 million with Parish Bank under the line of credit agreement. Interest at the prime rate of 12% was payable at maturity. | ||
May | 1 | Paid the 12% note at maturity. | ||
Dec. | 1 | Supported by the credit line, issued $18.0 million of commercial paper on a nine-month note. Interest was discounted at issuance at a 11% discount rate. | ||
31 | Recorded any necessary adjusting entry(s). |
2022
Sept. | 1 | Paid the commercial paper at maturity. |
Required:
Prepare the appropriate journal entries through the maturity of each liability. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round intermediate calculations. Enter your answers in whole dollars.)
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Record a revolving credit agreement negotiated with Parish Bank that can be renewed annually upon bank approval. The amount available under the line of credit is $30.5 million at the banks prime rate.
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2
Record a three-month bank loan of $7.8 million with Parish Bank under the line of credit agreement. Interest at the prime rate of 12% was payable at maturity.
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3
Record the payment of the 12% note at maturity.
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4
Record the issuance of $18.0 million of commercial paper on a nine-month note, supported by the credit line. Interest was discounted at issuance at a 11% discount rate.
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5
Record necessary adjusting entry to accrue interest on December 31.
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6
Record interest on commercial paper in 2022.
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7
Record the repayment of commercial paper at maturity.
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