Prepare Journal Entries to record the following transactions for Herman Inc ...
ID: 2592973 • Letter: P
Question
Prepare Journal Entries to record the following transactions for Herman Inc... Herman prepares Adjusting Entries at the end of each month.
August 15: Borrowed $60,000 from the bank by signing a 2-month, 5% Note. The interest was to be paid monthly.
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August 31: Prepared month-end adjustment to record the accrued interest on the loan.
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September 15: Paid monthly interest on the loan.
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September 30: Prepared month-end adjustment to record the accrued interest on the loan.
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October 15: Repaid the loan and the outstanding interest
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Explanation / Answer
15-Aug Cash 60000 Notes payable 60000 31-Aug Interest expense 125 (60000*5%*.5/12) Interest payable 125 15-Sep Interest expense 125 (60000*5%*.5/12) Interest payable 125 Cash 250 (60000*5%*1/12) 30-Sep Interest expense 125 (60000*5%*.5/12) Interest payable 125 15-Oct Interest expense 125 (60000*5%*.5/12) Interest payable 125 Notes payable 60000 Cash 60250 (60000+60000*5%*1/12)