Keesha Co. borrows $240,000 cash on December 1, 2017, by signing a 180-day, 9% n

Question

Keesha Co. borrows $240,000 cash on December 1, 2017, by signing a 180-day, 9% note with a face value of $240,000. 1. On what date does this note mature? (Assume that February has 28 days) May 25, 2018 May 26, 2018 May 27, 2018. May 28, 2018 May 30, 2018 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.) Total throughInterest maturity Interest Expense 2017 Expense 2018 Principa Rate 1%) Time Total interest S 240,000$240,000240,000 9% 150/360 9,000 99% 9% 180/360 30/360 $ 0,800 $ 1,800 $ 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.)

Explanation / Answer

1 May-30, 2018 2 Total through maturity Interest Expense 2015 Interest Expense 2016 Principal 240000 240000 240000 Rate (%) 9% 9% 9% Time 180/360 30/360 150/360 Total interest 10800 1800 9000 4 Transaction General Journal Debit Credit (a) Cash 2,40,000 Notes payable 2,40,000 (b) Interest expense 1,800 Interest payable 1,800 (c) Interest expense 9,000 Interest payable 1,800 Notes payable 2,40,000 Cash 2,50,800

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