Question
Asked Feb 4, 2020
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On January 1, 2021, Nantucket Ferry borrowed $14,600,000 cash from BankOne and issued a four-year, $14,600,000, 8% note. Interest was payable annually on December 31.
 
Prepare the journal entries for both firms to record interest at December 31, 2021.

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Expert Answer

Step 1: definition

Journal entry: Journal entry is a set of economic events which can be measured in monetary terms. These are recorded chronologically and systematically.

Step 2: Prepare journal entry to record in the books of borrower.

Accounting homework question answer, step 2, image 1

Working note:

Calculation of interest expense:

Accounting homework question answer, step 2, image 2

 

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