Branch Corporation issued $22 million of commercial paper on March 1 on a nine-m

Question

Branch Corporation issued $22 million of commercial paper on March 1 on a nine-month note. Interest was discounted at issuance at a 7% discount rate. Prepare the journal entry for the issuance of the commercial paper and its repayment at maturity. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in whole dollars.)

1. Record the issuance of the commercial paper.

2. Record the interest expense on the note at maturity

3. Record the repayment at maturity

Explanation / Answer

1 Issuance of the commercial paper 1-Mar Cash 20845000 Discount on Notes payable 1155000 ( 22000000*7%*9/12) To Cash 22000000 Interest 31/03 Interest Expenses Dr 128333.3 (1155000*1/9) Discount on notes payable 128333 It is assumed that the year will end on 31st march Maturity Interest Expenses Dr 1026667 Discount on notes payable 21871667 Notes Payable 22000000 To Cash 22000000

Related Questions

Navigate

• Browse (All)
• Browse B
• Subjects