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angelmilla
13.02.2020 •
Business
On February 1, Armstrong, Inc., borrowed $200,000 cash from First Bank under a noncommitted short-term line of credit arrangement and issued a three-month, 12% promissory note. Prepare the appropriate journal entry dated May 1 for the payment of principal and interest made at maturity
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Ответ:
cash 200,000 debit
note payable 200,000 credit
note payable 200,000 debit
interest expense 6,000 debit
cash 206,000 credit
Explanation:
the interest expense on the note will be calcualte as follows:
principal x rate x time = interest
being rate and time express in the same metric.
200,000 x 12% x 3/12 = 6,000 interest
we will declare this expense and pay the full amount
total cash outlay:
200,000 principal + 6,000interest = 206,000
Ответ:
Hope this helped :)