Mercedes Boats borrowed $220,000 on September 15, 2017, for 45 days at 7% intere
ID: 2611311 • Letter: M
Question
Mercedes Boats borrowed $220,000 on September 15, 2017, for 45 days at 7% interest by signing a note.
1. On what date will this note mature?
2. How much interest expense is created by this note? (Use 365 days a year. Do not round intermediate calculations and round the final answer to 2 decimal places.)
3. Prepare the journal entries for September 15, 2017, and the maturity date. (Use 365 days a year. Do not round intermediate calculations and round the final answers to 2 decimal places.)
1
Record the signing of a $220,000 note payable for 45 days at 7% interest.
2
Record the payment of note.
Explanation / Answer
1)Maturity date :september 15,2017+ 45 days = 30october 2017
2)Interest expense :220000*.07*45/365 = $ 1898.63
3)
Date Account debit credit 15 september 2017 Cash 220000 note payable 220000 [being amount borrowed] 30 october 2017 Note payable 220000 Interest expense 1898.63 cash 221898.63