Many businesses borrow money during periods of increased business activity to finance inventory and accounts receivable. For example, Mitt builds up its inventory to meet the needs of retailers selling to Christmas shoppers. A large portion of Mitt's sales are on credit. As a result, Mitt often collects cash from its sales several months after Christmas. Assume on November 1, 2018, Mitt borrowed $6.5 million cash from Metropolitan Bank and signed a promissory note that matures in six months. The interest rate was 6.00 percent payable at maturity. The accounting period ends December 31.   Required: 1, 2 & 3. Prepare the required journal entries to record the note on November 1, 2018, interest on the maturity date, April 30, 2019, assuming that interest has not been recorded since December 31, 2018. (Enter your answers in whole dollars. If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)

Question

Many businesses borrow money during periods of increased business activity to finance inventory and accounts receivable. For example, Mitt builds up its inventory to meet the needs of retailers selling to Christmas shoppers. A large portion of Mitt's sales are on credit. As a result, Mitt often collects cash from its sales several months after Christmas. Assume on November 1, 2018, Mitt borrowed $6.5 million cash from Metropolitan Bank and signed a promissory note that matures in six months. The interest rate was 6.00 percent payable at maturity. The accounting period ends December 31.

 

Required:

  1. 1, 2 & 3. Prepare the required journal entries to record the note on November 1, 2018, interest on the maturity date, April 30, 2019, assuming that interest has not been recorded since December 31, 2018. (Enter your answers in whole dollars. If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)

Expert Answer

Want to see the step-by-step answer?

See Answer

Check out a sample Q&A here.

Want to see this answer and more?

Experts are waiting 24/7 to provide step-by-step solutions in as fast as 30 minutes!*

See Answer
*Response times vary by subject and question complexity. Median response time is 34 minutes and may be longer for new subjects.
Tagged in
BusinessAccounting

Book Keeping

Related Accounting Q&A

Find answers to questions asked by student like you
Show more Q&A

Q: Gelb Company currently manufactures 40,000 units per year of a key component for its manufacturing p...

A: The decision to manufacture or buy needs to be taken on the basis of impact of cost changes arising ...

Q: I'm not understanding how to solve this problem. I watched the video given as an example but that ju...

A: a1: Prepare a journal entry to record the cost of transferred-in material.

Q: Valerie's & Christopher, a large marketing firm, adjust in accounts at the end of each months. T...

A: Click to see the answer

Q: Nova Company’s total overhead cost at various levels of activity are presented below:   Month Mac...

A: Click to see the answer

Q: Why  Question#7's answer is "false"?  Provide your own answer?

A: ASC606 is the new guideline set up by IASB and FASB together to overcome the disparity in revenue re...

Q: What is the difference between grease payment and bribery?  Is grease payment legal per FCPA and per...

A: Grease payment: A grease payment is a payment made to the international or government agencies to ge...

Q: They are going to start a manufacturing company and need help deciding what entity type to choose to...

A: The different types of business entities prevent in an economy are(a)    Sole Proprietorship(b)    P...

Q: a. A new operating system for an existing machine is expected to cost $520,000 and have a useful lif...

A: We need to add back annual depreciation to after tac profits, so that we are able to determine the c...

Q: Hi i need help answering this question please! The last section got a bit cut off for part e but it ...

A: Click to see the answer