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Question
CSeaure hps/newconnect.mheducation.com/flow/oonnect.html 0 Help Save &Exit; Subenit Week 3 Homework Check my work 4 its accounts monthly and closes its accounts on December 31. On October 31, year 1, Jesse Company signed a note payable and borrowed $140,000 from a bank for a period of six months at an annual interest rate a. How much is the total interest expense over the life of the note? Haw much is the monthly amounts of interest expense each month.) b. In the company's annual balance sheet at December 3t, year 1, what is the amount of the liability to the bank c. & d. Prepare the journal entry to record issuance of the note payable on October 31 year 1 and the adjusting entry to accrue interest points on the note at December 31, year 1 e. Assume the company prepared a balance sheet at March 31, year 2 State the amount of the lhability to the Prirt Relerences Complete tis question by entering your answers in the tabs below Rea B Rand ReaE Req A Assume the company prepared a balance sheet at March 31, year 2. State the amount of the liability to the bank at this date.Explanation / Answer
1) The total interest expense is $140000 *0.06 * (6/12) = $4200.
The monthly interest expense is $4200/6 = $700.
2) The liability to the bank is $140000 + $1400 = $141,400
3) Dr. Cash $140,000
Cr. Notes payable $140,000
4) Dr. Interest expense $700
Cr. Interest payable $700
5) The liability to the bank at Mar 31 is $143,500, include $140,000 principal plus $2800 accrued interest for five months. (140,000 + 700 + 4200*2/3)