Problem 9-1: Glencoe Inc. operates with a June 30 year-end. During 2016, the following transactions occurred:January 1: Signed a one year, 10% loan for $25,000. Interest and principal are to be paid at maturity.January 10: Signed a line of credit with Little Local Bank to establish a $400,000 line of credit. Interest of 9% will be charged on all borrowed funds.February 1: Issued a $20,000 non-interest-bearing, six-month note to pay for a new machine. Interest on the note, at 12%, was deducted in advance.March 1: Borrowed $150,000 on the line of credit.June 1: Repaid $100,000 on the line of credit plus accrued interest.June 30: Made all necessary adjusting entries.August 1: Repaid the non-interest-bearing note.September 1: Borrowed $200,000 on the line of credit.November 1: Insured a 3 month, 8%, $12,000 note in payment of an overdue open account.December 31: Repaid the one-year loan [from transaction (a)] plus accrued interest.Record all journal entries necessary to report these transactions.As of December 31, which notes are outstanding? How much interest is due on each?

Line of Credit: A line of credit (LOC) is a preset borrowing limit that can be used at any time. The…

Answered: Problem 9-1: Glencoe Inc. operates with…

Financial Accounting: The Impact on Decision Makers

10th Edition

ISBN:9781305654174

Author:Gary A. Porter, Curtis L. Norton

Publisher:Gary A. Porter, Curtis L. Norton

Chapter9: Current Liabilities, Contingencies, And The Time Value Of Money

Section: Chapter Questions

Problem 9.1P

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Problem 9-1: Glencoe Inc. operates with a June 30 year-end. During 2016, the following transactions occurred:

January 1: Signed a one year, 10% loan for $25,000. Interest and principal are to be paid at maturity.
January 10: Signed a line of credit with Little Local Bank to establish a $400,000 line of credit. Interest of 9% will be charged on all borrowed funds.
February 1: Issued a $20,000 non-interest-bearing, six-month note to pay for a new machine. Interest on the note, at 12%, was deducted in advance.
March 1: Borrowed $150,000 on the line of credit.
June 1: Repaid $100,000 on the line of credit plus accrued interest.
June 30: Made all necessary adjusting entries.
August 1: Repaid the non-interest-bearing note.
September 1: Borrowed $200,000 on the line of credit.
November 1: Insured a 3 month, 8%, $12,000 note in payment of an overdue open account.
December 31: Repaid the one-year loan [from transaction (a)] plus accrued interest.

Record all journal entries necessary to report these transactions.
As of December 31, which notes are outstanding? How much interest is due on each?

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