1. Prepare the journal entries on October 1, 2018, to record the issuance of the
ID: 2556940 • Letter: 1
Question
1. Prepare the journal entries on October 1, 2018, to record the issuance of the note. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in dollars, not in millions (i.e., $5.5 million should be entered as 5,500,000).)
2. Record the adjustments on December 31, 2018. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in dollars, not in millions (i.e., $5.5 million should be entered as 5,500,000).)
3. Prepare the journal entries on September 30, 2019, to record payment of the notes payable at maturity. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in dollars, not in millions (i.e., $5.5 million should be entered as 5,500,000).)
Required Intormation [The following information to the questions displayed below] Precision Castparts, a manufacturer of processed engine parts in the automotive and airline industries, borrows $40.9 million cash on October 1, 2018, to provide working n. Precision signs a one-year, 8% promissory note to Midwest Bank under a prearranged short-term line of credit. Interest on the note is payable at maturity. Each firm has a December 31 year-end.Explanation / Answer
Solution :
Journal Enteries - Precision Castparts Date General Journal Debit Credit 1-Oct-18 Cash Dr $40,900,000.00 To Short term notes payable $40,900,000.00 (Being $40.9 million borrowed from Midwest Bank at 8% interest for 1 year) 31-Dec-18 Interest Expense Dr ($40,900,000 * 8%*3/12) $818,000.00 To Interest payable $818,000.00 (Being interest accured but not due on note payable) 30-Sep-19 Interest Expense Dr ($40,900,000 * 8%*9/12) $2,454,000.00 To Interest payable $2,454,000.00 (Being interest due on note payable) 30-Sep-19 Short term notes payable Dr $40,900,000.00 Interest Payable Dr $3,272,000.00 To Cash $44,172,000.00 (Being repayment of notes and interest on maturity recorded)Related Questions
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