Keesha Co. borrows $170,000 cash on November 1, 2015, by signing a 120-day, 7% n

Question

Keesha Co. borrows $170,000 cash on November 1, 2015, by signing a 120-day, 7% note with a face value of $170,000. 1. On what date does this note mature? Assume a 365 day year. O March 27, 2016. O March 28, 2016. O March 29, 2016. O March 30, 2016. O March 01, 2016. 2-3. What is the amount of interest expense in 2015 and 2016 from this note? (Use 360 days a year. Do not round intermediate calculations.) Total through Interest through Expense Interest 2015 Expense 2016 maturity Principal Rate (%) Time Total interest

Explanation / Answer

Answer 1. March 1, 2016 No. Of Days Days Left Nov. 1 120 Nov 29 91 Dec 31 60 Jan 31 29 Feb 29 0 So, Note mature on March 1, 2016 Answer 2 -3. Total through Maturity Interest Expense 2015 Interest Expense 2016 Principle          170,000         170,000            170,000 Rate (%) 7% 7% 7% Time 120 Days 60 Days 60 Days Total interest        3,966.67       1,983.33          1,983.33 Answer 4. Journal Entry Date Particulars Dr. Amt Cr. Amt 1/11/2015 Cash                                                      Dr.    170,000.00    To Notes Payable    170,000.00 31/12/2015 Interest Exp.                                       Dr.        1,983.33 To Interest Payable        1,983.33 1/3/2016 Notes Payable                                    Dr.    170,000.00 Interest Exp.                                       Dr.        1,983.33 Interest Payable                               Dr.        1,983.33    To Cash    173,966.66

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