prepare the journal entry to record payment of the note at maturity

Question: On November 7, 2017, Mura Company borrows $160,000 cash by signing a 90-day, 8% note payable with a face value of $160,000. (1) Compute the accrued interest payable on December 31, 2017, (2) prepare the journal entry to record the accrued interest expense at December 31, 2017, and (3) prepare the journal entry to record payment of the note at maturity

Solutions

Expert Solution

Step 3: Journal entry of accrued interest

Date	Particulars	Debit	Credit
December 31, 2017	Interest Expense	$1,920
	Interest Payable		$1,920
	(Being entry of accrued interest)

February 5, 2017	Notes Payable	$160,000
	Interest Payable	$1,920
	Interest Expense	$1,280
	Cash		$163,200
	(Being entry for the payment of interest and bonds on maturity)

Accrued interest is the interest that is due but not paid. The accrued interest is not paid till the end of the year. The amount of the accrued interest payable is recorded in the balance sheet as current liabilities.

Sahil Dangi answered 1 year ago

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