Textbook Problem

ProblemB Entries for and Financial Statement Presentation of a Note

Griddley Company borrowed $200,000 from the East Salvador Bank on February 1, 2019, on a 3-year, 8.6% note. Interest is paid annually on January 31.

Required:

1. Record the borrowing transaction in Griddley’s journal.
2. Prepare the adjusting entries made at December 31,2019 and 2020. {Note: Round to the nearest dollar,)
3. Prepare the necessary journal entry to recognize the first interest payment on January 31, 2020. (Note: Round to the nearest dollar.)
4. Indicate how the note and associated interest would be presented in Griddley’s December 31, 2020 balance sheet.
5. Prepare the necessary journal entries to record the repayment of the note and the last year’s interest payment on January 1, 2022. (Note: Round to the nearest dollar.)