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20 February, 01:36

Flint Company borrowed $46,800 on November 1, 2020, by signing a $46,800, 9%, 3-month note. Prepare Flint's November 1, 2020, entry; the December 31, 2020, annual adjusting entry; and the February 1, 2021, entry.

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  1. 20 February, 02:04
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    The journal entry on November 1, 2020:

    Debit Cash $46,800

    Credit Notes Payable $46,800

    The journal entry on December 31, 2020:

    Debit Interest expense $351

    Credit Interest Payable $351

    The journal entry on February 1, 2021:

    Debit Interest Payable $351

    Debit Interest expense $702

    Debit Notes Payable $46,800

    Credit Cash $47,853

    Explanation:

    The amount of interest Flint Company has to pay = ($46,800 x 9%/12) x3 = $1,053

    The amount of interest Flint Company has to pay per month = $1,053/3 = $351

    The journal entry on November 1, 2020:

    Debit Cash $46,800

    Credit Notes Payable $46,800

    The journal entry on December 31, 2020:

    Debit Interest expense $351

    Credit Interest Payable $351

    The journal entry on February 1, 2021:

    Flint pays the principal and interest owed on the note. The entry by Flint for the payment (maturity) of the note plus interest:

    Debit Interest Payable $351

    Debit Interest expense $702

    Debit Notes Payable $46,800

    Credit Cash $47,853
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Home » Business » Flint Company borrowed $46,800 on November 1, 2020, by signing a $46,800, 9%, 3-month note. Prepare Flint's November 1, 2020, entry; the December 31, 2020, annual adjusting entry; and the February 1, 2021, entry.
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