Blanton Plastics, a household plastic product manufacturer, borrowed $6 million cash on October 1, 2021, to provide working capital for year-end production. Blanton Issued a four-month, 14% 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. Requlred: 1. Prepare the Journal entries to record (a) the Issuance of the note by Blanton Plastics and (b) L&T Bank's recelvable on October 1, 2021. 2. Prepare the Journal entrles by both firms to record all subsequent events related to the note through January 31, 2022. 3. Suppose the face amount of the note was adjusted to Include Interest (a noninterest-bearing note) and 14% 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, 2021, the adjusting entry at December 31, and payment of the note at maturity. (b) What would be the effective Interest rate?

Blanton Plastics, a household plastic product manufacturer, borrowed $6 million cash on October 1, 2021, to provide working capital for year-end production. Blanton Issued a four-month, 14% 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. Requlred: 1. Prepare the Journal entries to record (a) the Issuance of the note by Blanton Plastics and (b) L&T Bank's recelvable on October 1, 2021. 2. Prepare the Journal entrles by both firms to record all subsequent events related to the note through January 31, 2022. 3. Suppose the face amount of the note was adjusted to Include Interest (a noninterest-bearing note) and 14% 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, 2021, the adjusting entry at December 31, and payment of the note at maturity. (b) What would be the effective Interest rate?

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter12: Current Liabilities

Section: Chapter Questions

Problem 9PB: Pickles R Us is a pickle farm located in the Northeast. The following transactions take place: A. On...

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Chemical Enterprises issues a note in the amount of $156,000 to a customer on January 1, 2018. Terms of the note show a maturity date of 36 months, and an annual interest rate of 8%. What is the accumulated interest entry if 9 months have passed since note establishment?
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