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27 August, 03:25

On october 1, steve's carpet service borrows $350,000 from first national bank on a 3-month, $350,000, 8% note. what entry must steve's carpet service make on december 31 before financial statements are prepared?

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  1. 27 August, 03:31
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    Recognise Asset - Cash and Liability - Note Payable at $350,000

    Recognise Interest Expense accrued on Note Payable at $ 28,000

    Explanation:

    J1

    Bank $350,000 (debit)

    Note Payable $350,000 (credit)

    Recognise Asset - Cash and Liability - Note Payable at $350,000

    J2

    Interest Expense $ 28,000 (debit)

    Note Payable $ 28,000 (credit)

    Recognise Interest Expense accrued on Note Payable at $ 28,000
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