Denmark Company. borrowed $30,000 from National Bank on October 1, 2016, for a n

Question

Denmark Company. borrowed $30,000 from National Bank on October 1, 2016, for a nine-month period; 4% interest is payable at maturity.

Can someone show me how to record the following?

1) the receipt of the bank loan on October 1, 2016

2) the accrual of interest on December 31, 2016

3) the payment of the loan on July 1, 2016.

Also for For the National Bank, can someone show me how to record?

1) the issue of the bank loan on October 1, 2016;

2) the accrual of interest on December 31, 2016

3) the collection of the loan on July 1, 2016.

Explanation / Answer

Dear Student Thank you for using Chegg Please find below the answer Statementshowing Computations Paticulars Dr Cr Denmark company 1) Oct 01'2016 Cash Dr            30,000.00 To Loan Payable            30,000.00 2) December 31'2016 Interest Expense Dr                  400.00 To interest payable                  400.00 (30000*4%*3/9) 3) Jul 01 '2016 Loan Payable Dr            30,000.00 Interest Payable Dr                  400.00 Interest Expense Dr = 30000*4%*6/9                  800.00 To Cash            31,200.00 National Bank 1) Oct 01'2016 Loan receivable DR            30,000.00 To cash            30,000.00 2) Dec 31'2016 Interest Receivable Dr                  400.00 To Interest revenue                  400.00 3) Jul 01 '2016 Cash            31,200.00 To Interest receivable                  400.00 To Interest revenues                  800.00 To Loan receivable            30,000.00

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