Kelly Jones and Tami Crawford borrowed $30,000 on a 7-month, 5% note from Gem St

Question

Kelly Jones and Tami Crawford borrowed $30,000 on a 7-month, 5% note from Gem State Bank to open their business, JC's Coffee House. The money was borrowed on June 1, 2017, and the note matures January 1, 2018 Prepare the entry to record the receipt of the funds from the loan. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) June 1 Prepare the entry to accrue the interest on June 30. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Cvia une 30 Assuming adjusting entries are made at the end of each month, determine the balance in the interest payable account at December 31, 2017 Balance in interest payable account Prepare the entry required on January 1, 2018, when the loan is paid back. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Acceust Titles and Explanation Jan. 1, 2018 Click if you would like to Show Work fer this

Explanation / Answer

Balance in interest payable account $1225

$175 x 7 months = $1225

Date Account Titles and Explanation Debit Credit Jun-01 Cash 30000 Notes payable 30000 (To record receipt of funds from loan) Jun-30 Interest expense ($30000 x 7% x 1/12) 175 Interest payable 175 (To record interest accrued on note payable)

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