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Homework answers / question archive / Required information Problem 8-2B Record notes payable and notes receivable (LO8-2) Skip to question [The following information applies to the questions displayed below
Required information Problem 8-2B Record notes payable and notes receivable (LO8-2) Skip to question [The following information applies to the questions displayed below.] Eskimo Joe’s, designer of the world’s second best-selling T-shirt (just behind Hard Rock Cafe), borrows $21 million cash on November 1, 2021. Eskimo Joe’s signs a six-month, 7% promissory note to Stillwater National Bank under a prearranged short-term line of credit. Interest on the note is payable at maturity. Each firm has a December 31 year-end.
2. Record the adjustments on December 31, 2021, for (a) Eskimo Joe's and (b) Stillwater National Bank
urnal entry worksheet
Note: Enter debits before credits.
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Journal entry worksheet
Note: Enter debits before credits.
|
3. Prepare the journal entry on April 30, 2022, to record payment of the notes payable at maturity.
Journal entry worksheet
Note: Enter debits before credits.
|
Journal entry worksheet
Note: Enter debits before credits.
|
Step - (1) - Information Given -
Eskimo Joe's, borrows $21 million cash on November 1, 2021.
Eskimo Joe's signs a six-month, 7% promissory note to Stillwater National Bank under a prearranged short-term line of credit.
Interest on the note is payable at maturity. Each firm has a December 31 year-end.
.
Step - (2) -
Journal Entries in the books of -- Eskimo Joe's
| Date | General Journal | Debit ($) | Credit ($) |
| November 1, 2021 |
Cash Note Payable (To record note payable) |
21000000 - |
- 21000000 |
| December 31, 2021 |
Interest Expense [$21000000 * 7% * 2/12] Interest Payable (To record accrued interest for 2 months) |
245000 - |
- 245000 |
| April 30, 2022 |
Interest Expense [$21000000 * 7% * 4/12] Interest Payable Note Payable Cash (To record payment of note payable plus interest) |
735000 245000 21000000 - |
- - - 21980000 |
| Total | 43225000 | 43225000 | |
.
Step - (3) -
Journal Entries in the books of -- Stillwater National Bank
| Date | General Journal | Debit ($) | Credit ($) |
| November 1, 2021 |
Notes Receivable Accounts Receivable (To record acceptance of note) |
21000000 - |
- 21000000 |
| December 31, 2021 |
Interest Receivable Interest Income [$21000000 * 7% * 6/12] (To record accrued interest for 2 months) |
245000 - |
- 245000 |
| April 30, 2022 |
Cash Interest Income [$21000000 * 7% * 4/12] Interest Receivable Notes Receivable (To record collection of notes receivable plus interest) |
21980000 - - - |
- 735000 245000 21000000 |
| Total | 43225000 | 43225000 | |
