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Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881

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BuyFindarrow_forward

Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881
Textbook Problem
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Notes Payable

Renchen Company, which manufactures steel tubing and casing for automobile production, borrowed $500,000 on January 1 to finance the purchase of a new piece of machinery with new heating technology. The terms of Renchen’s note dictate that it is a 4-month, 9%, interest-bearing note.

Required:

1. Record the borrowing transaction.

2. Record the repayment transaction.

To determine

Concept introduction:

Note Payable:

Note payable is in the form of a promissory note which is provides as a loan by the lender to the borrower. The note payable is loaded with interest terms which provide the payment of specified interest % on the amount borrowed.

Requirement 1:

To prepare:

The journal entry for the borrowing transaction.

Explanation

The journal entry for the borrowing transaction is explained as follows:

Renchen Company
Journal Entries
Date Account T...
To determine

Concept introduction:

Note Payable:

Note payable is in the form of a promissory note which is provides as a loan by the lender to the borrower. The note payable is loaded with interest terms which provide the payment of specified interest % on the amount borrowed.

Requirement 2:

To prepare:

The journal entry for the repayment transaction.

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