In: Accounting
A company borrowed $75,000 by signing a 75-day, 5% note payable from its bank on Ju,y 15.
Required:
1. Prepare jorunal entry to record the borrowing of money Indicate maturity date. (2 points)
2. Compute interest amount. (3 points)
3. Compute the cash payment due on the note's maturity date. (2 points)
4. Prepare jorunal entry to record the payment of the note on maturity date. (3 points)
1.
Month | days |
July | 16 |
August | 31 |
September | 28 |
Total days | 75 days |
Maturity date = 75 days
Journal
Date |
Account Title and Explanation |
Debit |
Credit |
July 15 | Cash | 75,000 | |
Note payable | 75,000 |
2.
Interest = Note payable x Interest rate x 75/360
= 75,000 x 5% x 75/360
= $781.25
3.
Cash payment due at the maturity = Note payable + Interest
= 75,000 + 781.25
= $75,781.25
4
Journal
Date |
Account Title and Explanation |
Debit |
Credit |
Sept 28 | Note payable | 75,000 | |
Interest expense | 781.25 | ||
Cash | 75,781.25 |