60.1K
Verified Solution
Link Copied!
Entries for and Financial Statement Presentation of a Note
Augustine Corporation borrowed $67,000 from the J.P. Morgan Chase Bank on June 1, 2023, on a 3-year, 8.7% note. Interest is paid annually on May 31.
If required, round amounts to the nearest dollar.
Required:
Question Content Area
1. Record the borrowing transaction in Augustine's journal. If an amount box does not require an entry, leave it blank.
2023, June 1 Accounts PayableCashInterest ExpenseInterest PayableNotes Payable
- Select - - Select - Accounts PayableCashInterest ExpenseInterest PayableNotes Payable
- Select - - Select - Record issuance of note at par
Question Content Area
2. Prepare the adjusting entries made at December 31, 2023 and 2024. If an amount box does not require an entry, leave it blank.
2023, December 31 Accounts PayableCashInterest ExpenseInterest PayableNotes Payable
- Select - - Select - Accounts PayableCashInterest ExpenseInterest PayableNotes Payable
- Select - - Select - Record interest expense 2024, December 31 Accounts PayableCashInterest ExpenseInterest PayableNotes Payable
- Select - - Select - Accounts PayableCashInterest ExpenseInterest PayableNotes Payable
- Select - - Select - Record interest expense
Question Content Area
3. Prepare the necessary journal entry to recognize the first interest payment on May 31, 2024. If an amount box does not require an entry, leave it blank.
2024, May 31 Accounts PayableCashInterest ExpenseInterest RevenueNotes Payable
- Select - - Select - Accounts PayableCashInterest PayableInterest RevenueNotes Payable
- Select - - Select - Accounts PayableCashInterest ExpenseInterest RevenueNotes Payable
- Select - - Select - Record interest expense and payment of interest
Question Content Area
4. Indicate how the note and associated interest would be presented in Augustine's December 31, 2024 balance sheet.
Augustine Corporation Balance Sheet (partial) December 31, 2024 Current liabilities: Accounts payableInterest expenseInterest payableInterest revenueNotes payable
$- Select - Long-term liabilities: Accounts PayableInterest expenseInterest payable, 8.7%, due in 2026Notes payable, 8.7%, due in 2026Notes receivable, 8.7%, due in 2026
- Select -
Question Content Area
5. Prepare the necessary journal entries to record the repayment of the note and the last year's interest payment on May 31, 2026. If an amount box does not require an entry, leave it blank.
2026, May 31 Accounts PayableCashInterest ExpenseInterest Revenueotes Receivable
- Select - - Select - Accounts PayableCashInterest PayableInterest RevenueNotes Payable
- Select - - Select - Accounts PayableCashInterest ExpenseInterest RevenueNotes Payable
- Select - - Select - Record interest expense and payment of interest 2026, May 31 Accounts PayableCashInterest ExpenseInterest RevenueNotes Payable
- Select - - Select - Accounts PayableCashInterest ExpenseInterest RevenueNotes Payable
- Select - - Select - Record repayment of note principal
Answer & Explanation
Solved by verified expert
