CSS Marketing (CSM) recently hired a row marketing director. Jeff Otos. for its
ID: 2443616 • Letter: C
Question
CSS Marketing (CSM) recently hired a row marketing director. Jeff Otos. for its downtown Minneapolis office. As part of the arrangement. CSM agreed on February 28. 2007. to advance Jeff $50,000 on a one-year, 8 percent note, with interest to be paid at maturity or February 28. 2008 CSM prepares financial statements on June 30 and December 31. Prepare the journal entry that CSM will make to record the establishment of the note.(Omit the "S" sign in your response.) Prepare the journal entries that CSM will make to accrue interest on June 30 and December 31. (Omit the sign in your response.) Prepare the journal entry that CSM will make to record the interest and principal payments on February 28. 2008. (Round your answer to the nearest whole number. Omit the "S" sign in your response.)Explanation / Answer
Int on Note from 1 Mar'07 to 30 Jun'07 ie 4 months = 8%*$50000*4/12 = 1333.33 Int on Note from 1 Jul'07 to 28 Feb'08 ie 8 months = 8%*$50000*8/12 = 2666.67 28 Feb'07 Notes Rxable Dr $50,000 Cash Cr $50,000 30 Jun'07 Int Rxable Dr $1333.33 Int Revenue Cr $1333.33 31 Dec'07Int Rxable Dr $2666.67 Int Revenue Cr $2666.67 28 Fe'08 Cash Dr $54,000 Int Revenue Cr $4000 Cash (Note rxable) Cr $50,000 Int Paybale Cr $0