On September 1, 2013, Triton Entertainment borrowed $24 million cash to fund a n

ID: 2503388 • Letter: O

Question

On September 1, 2013, Triton Entertainment borrowed $24 million cash to fund a new Fun

Park. The loan was made by Nevada Bank under a noncommitted short-term line of credit arrangement.

Triton issued a 9-month, 12% promissory note. Interest was payable at maturity. Triton's fiscal period is

the calendar year.

Required:

1. Prepare the journal entry for the issuance of the note by Triton.

2. Prepare the appropriate adjusting entry for the note by Triton on December 31 , 2013.

3. Prepare the journal entry for the payment of the note at maturity.

Show all work

Date

General Journal

Debit

Credit

Date

General Journal

Debit

Credit

Hi,

Please find the answer as follows:

Part 1:

Cash Dr. 24000000

Notes Payable Cr. 24000000

Part 2:

Interest Expense (24000000*4/12*12%) Dr. 960000

Interest Payable Cr. 960000

Part 3:

Interest Expense (24000000*5/12*12%) Dr.

Interest Payable Dr. 960000

Notes Payable Dr. 24000000

Cash Cr. 26160000

Thanks.

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