E10-2 Recording a Note Payable through Its Time to Maturity [LO 10-2] Many busin

Question

E10-2 Recording a Note Payable through Its Time to Maturity [LO 10-2] Many businesses borrow money during periods of increased business activity to finance inventory and accounts receivable. Target Corporation is one of America's largest general merchandise retailers. Each Christmas, Target builds up its inventory to meet the needs of Christmas shoppers. A large portion of Christmas sales are on credit. As a result, Target often collects cash from the sales several months after Christmas. Assume that on November 1, 2015, Target borrowed $7.4 million cash from Metropolitan Bank and signed a promissory note that matures in six months. The interest rate was 6.00 percent payable at maturity. The accounting period ends December Required: 1,2&3.Complete the required jounal entries to record the note on November 1, 2015, interest on the maturity date, April 30, 2016, assuming that interest has not been recorded since December 31, 2015. (Enter your answers in whole dollars. If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.) View transaction list ?ournal entry worksheet Record the borrowing of $7,400,000 Note: Enter debits before credits. redit November 01 2015 Record entry View general journal

Explanation / Answer

Journal Entries: Date Accounts title and explanations Debit $ Credit $ NOV 1 2015 Cash Account Dr. 7,400,000     Notes payable 7,400,000 Dec 31 2015 Interest Expense Dr. 74000     Interest payable (7400,000*6%*2/12) 74000 April 30 2016 Notes payable Dr. 7,400,000 Interest payable Dr. 74,000 Interest expense (7400,000*6%*4/12) 148000 Cash Account 7,622,000

Related Questions

Navigate

• Browse (All)
• Browse E
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.