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Blanton Plastics, a household plastic product manufacturer, borrowed $22 million cash on October 1, 2024, to provide working capital for year-end production. Blanton issued a four-month, 12% promissory note to L&T Bank under a prearranged short-term line of credit. Interest on the note was payable at maturity. Each firm's fiscal period is the calendar year. Required: 1. Prepare the journal entries to record (a) the issuance of the note by Blanton Plastics and (b) L&T Bank's receivable on October 1, 2024. 2. Prepare the journal entries by both firms to record all subsequent events related to the note through January 31, 2025. 3. Suppose the face amount of the note was adjusted to include interest (a noninterest-bearing note) and 12% is the bank's stated discount rate. (a) Prepare the journal entries to record the issuance of the noninterest-bearing note by Blanton Plastics on October 1, 2024, the adjusting entry at December 31, and payment of the note at maturity. (b) What would be the effective interest rate? Complete this question by entering your answers in the tabs below. Reg 1 Req 2 Reg 3A Prepare the journal entries to record (a) the issuance of the note by Blanton Plastics and (b) L&T Bank's receivable on October 1, 2024. Note: If no entry is required for a transaction/event, select "No Journal entry required in the first account field. Enter your answers in whole dollars. Req 3B

Blanton Plastics, a household plastic product manufacturer, borrowed $22 million cash on October 1, 2024, to provide working capital for year-end production. Blanton issued a four-month, 12% promissory note to L&T Bank under a prearranged short-term line of credit. Interest on the note was payable at maturity. Each firm's fiscal period is the calendar year. Required: 1. Prepare the journal entries to record (a) the issuance of the note by Blanton Plastics and (b) L&T Bank's receivable on October 1, 2024. 2. Prepare the journal entries by both firms to record all subsequent events related to the note through January 31, 2025. 3. Suppose the face amount of the note was adjusted to include interest (a noninterest-bearing note) and 12% is the bank's stated discount rate. (a) Prepare the journal entries to record the issuance of the noninterest-bearing note by Blanton Plastics on October 1, 2024, the adjusting entry at December 31, and payment of the note at maturity. (b) What would be the effective interest rate? Complete this question by entering your answers in the tabs below. Reg 1 Req 2 Reg 3A Prepare the journal entries to record (a) the issuance of the note by Blanton Plastics and (b) L&T Bank's receivable on October 1, 2024. Note: If no entry is required for a transaction/event, select "No Journal entry required in the first account field. Enter your answers in whole dollars. Req 3B

Financial Accounting
Financial Accounting
14th Edition
ISBN:9781305088436
Author:Carl Warren, Jim Reeve, Jonathan Duchac
Publisher:Carl Warren, Jim Reeve, Jonathan Duchac
Chapter14: Long-term Liabilities: Bonds And Notes
Section: Chapter Questions
Problem 6PB
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Blanton Plastics, a household plastic product manufacturer, borrowed $22 million cash on October 1, 2024, to provide working capital for year-end production. Blanton issued a four-month, 12% promissory note to L&T Bank under a prearranged short-term line of credit. Interest on the note was payable at maturity. Each firm's fiscal period is the calendar year. Required: 1. Prepare the journal entries to record (a) the issuance of the note by Blanton Plastics and (b) L&T Bank's receivable on October 1, 2024. 2. Prepare the journal entries by both firms to record all subsequent events related to the note through January 31, 2025. 3. Suppose the face amount of the note was adjusted to include interest (a noninterest-bearing note) and 12% is the bank's stated discount rate. (a) Prepare the journal entries to record the issuance of the noninterest-bearing note by Blanton Plastics on October 1, 2024, the adjusting entry at December 31, and payment of the note at maturity. (b) What would be the effective interest rate? Complete this question by entering your answers in the tabs below. Req 1 Req 2 Req 3B Reg 3A Prepare the journal entries to record (a) the issuance of the note by Blanton Plastics and (b) L&T Bank's receivable on October 1, 2024. Note: If no entry is required for a transaction/event, select "No Journal entry required in the first account field. Enter your answers in whole dollars.
Transcribed Image Text:Blanton Plastics, a household plastic product manufacturer, borrowed $22 million cash on October 1, 2024, to provide working capital for year-end production. Blanton issued a four-month, 12% promissory note to L&T Bank under a prearranged short-term line of credit. Interest on the note was payable at maturity. Each firm's fiscal period is the calendar year. Required: 1. Prepare the journal entries to record (a) the issuance of the note by Blanton Plastics and (b) L&T Bank's receivable on October 1, 2024. 2. Prepare the journal entries by both firms to record all subsequent events related to the note through January 31, 2025. 3. Suppose the face amount of the note was adjusted to include interest (a noninterest-bearing note) and 12% is the bank's stated discount rate. (a) Prepare the journal entries to record the issuance of the noninterest-bearing note by Blanton Plastics on October 1, 2024, the adjusting entry at December 31, and payment of the note at maturity. (b) What would be the effective interest rate? Complete this question by entering your answers in the tabs below. Req 1 Req 2 Req 3B Reg 3A Prepare the journal entries to record (a) the issuance of the note by Blanton Plastics and (b) L&T Bank's receivable on October 1, 2024. Note: If no entry is required for a transaction/event, select "No Journal entry required in the first account field. Enter your answers in whole dollars.
October 1, 2024, the adjusting entry at December 31, and payment of the note at maturity. (b) What would be the effective interest rate? Complete this question by entering your answers in the tabs below. Req 11 Reg 2 Reg 3A Suppose the face amount of the note was adjusted to include interest (a noninterest-bearing note) and 12% is the bank's stated discount rate. (b) What would be the effective interest rate? Note: Do not round intermediate calculations and round your final answer to 1 decimal place. Effective interest rate Req 3B < Req 3A
Transcribed Image Text:October 1, 2024, the adjusting entry at December 31, and payment of the note at maturity. (b) What would be the effective interest rate? Complete this question by entering your answers in the tabs below. Req 11 Reg 2 Reg 3A Suppose the face amount of the note was adjusted to include interest (a noninterest-bearing note) and 12% is the bank's stated discount rate. (b) What would be the effective interest rate? Note: Do not round intermediate calculations and round your final answer to 1 decimal place. Effective interest rate Req 3B < Req 3A
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