2 Keesha Co. borrows $170,000 cash on December 1, 2017, by signing a 90-day, 11%
ID: 2532624 • Letter: 2
Question
2 Keesha Co. borrows $170,000 cash on December 1, 2017, by signing a 90-day, 11% note with a face value of $170,000 1. On what date does this note mature? (Assume that February has 28 days) 10 points O February 24, 2018 O February 25, 2018 February 26, 2018 February 27, 2018 March 01, 2018 eBook Print 2. & 3. What is the amount of interest expense in 2017 and 2018 from this note? (Use 360 days a year. Round final answers to the nearest whole dollar.) References Total Interest Expense 2017 Expense 2018 Interest through maturity Principal Rate (%) Time Total interest 4. Prepare journal entries to record (a) issuance of the note, (b) accrual of interest at the end of 2017, and (c) payment of the note at maturity. (Assume no reversing entries are made.) (Use 360 days a year. Do not round intermediate calculations.) View transaction listExplanation / Answer
Solution:
Part 2 & 3
Total through maturity
Interest Expense 2017
Interest Expense 2017
Principal
$170,000
Rate (%)
11%
Time
90 / 360
Or
90
31 / 360
Or
31
59 / 360
Or
59
Total Interest
$4,675
$1,610
$3,065
Part 4(a) --
Date
General Journal
Debit
Credit
(a) Dec.1, 2017
Cash
$170,000
Notes Payable
$170,000
(b) Dec.31, 2017
Interest Expense
$1,610
Interest Payable
$1,610
(c ) March.1, 2018
Notes Payable
$170,000
Interest Payable
$1,610
Interest Expense
$3,065
Cash
$174,675
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Total through maturity
Interest Expense 2017
Interest Expense 2017
Principal
$170,000
Rate (%)
11%
Time
90 / 360
Or
90
31 / 360
Or
31
59 / 360
Or
59
Total Interest
$4,675
$1,610
$3,065
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