On July 1, 2023, Wildhorse Ltd. received a loan from its bank for $20,000 bearing interest at 6%. The loan is payable in two annual instalments of $10,909 principal and interest on June 30 each year. The company records adjusting journal entries annually at year end on December 31.

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14th Edition
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Chapter14: Long-term Liabilities: Bonds And Notes
Section: Chapter Questions
Problem 11E
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On July 1, 2023, Wildhorse Ltd. received a loan from its bank for $20,000 bearing interest at 6%. The loan is payable in two annual
instalments of $10,909 principal and interest on June 30 each year. The company records adjusting journal entries annually at year
end on December 31.
(a)
Your answer is correct.
Prepare an instalment payment schedule for the term of the loan. (Round answers to O decimal places, e.g. 5,255.)
+A
Cash Payment
10909
10909
+A
Interest Expense
1200
617
LA
Reduction of Principal
9709
10292
tA
Principal Balance
20000
10291
-1
Transcribed Image Text:On July 1, 2023, Wildhorse Ltd. received a loan from its bank for $20,000 bearing interest at 6%. The loan is payable in two annual instalments of $10,909 principal and interest on June 30 each year. The company records adjusting journal entries annually at year end on December 31. (a) Your answer is correct. Prepare an instalment payment schedule for the term of the loan. (Round answers to O decimal places, e.g. 5,255.) +A Cash Payment 10909 10909 +A Interest Expense 1200 617 LA Reduction of Principal 9709 10292 tA Principal Balance 20000 10291 -1
(b)
Record (1) the receipt of $20,000 cash from the loan on July 1, 2023; (2) the accrual of interest on December 31, 2023; (3) the
first instalment payment on June 30, 2024; and (4) the accrual of interest on December 31, 2024. (Round answers to O decimal
places, e.g. 5,275. Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is
required, select "No Entry" for the account titles and enter O for the amounts. List all debit entries before credit entries.)
Date
2023
uly 1
Dec. 31
2024
ne 30
Your answer is partially correct.
Dec. 31
Account Titles
Cash
Bank Loan Payable
Interest Expense
Interest Payable
Interest Expense
Bank Loan Payable
Interest Payable
Cash
Interest Expense
Interest Payable
Debit
20000
1
600
600
600
309
Credit
ITO DOM
20000
600
10909
309
Transcribed Image Text:(b) Record (1) the receipt of $20,000 cash from the loan on July 1, 2023; (2) the accrual of interest on December 31, 2023; (3) the first instalment payment on June 30, 2024; and (4) the accrual of interest on December 31, 2024. (Round answers to O decimal places, e.g. 5,275. Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. List all debit entries before credit entries.) Date 2023 uly 1 Dec. 31 2024 ne 30 Your answer is partially correct. Dec. 31 Account Titles Cash Bank Loan Payable Interest Expense Interest Payable Interest Expense Bank Loan Payable Interest Payable Cash Interest Expense Interest Payable Debit 20000 1 600 600 600 309 Credit ITO DOM 20000 600 10909 309
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