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Homework answers / question archive / Iris Limited borrowed $90,000 from Bank by signing a one-year 8% note payable on 1 May 2019
Iris Limited borrowed $90,000 from Bank by signing a one-year 8% note payable on 1 May 2019. The year end of Iris Limited is 31 December.
Required:
(a) Calculate the interest expense for Iris Limited for the year ended 31 December 2019. (2 marks)
(b) Prepare journal entries to record the payment of the note payable for Iris Limited on 1 May 2020. (Narration is NOT required.)
Here's is my answer for the above asked question
(a) Interest expense for the year ended December 31, 2019 = $90,000 x 8% x (8/12) = $ 4,800
(b) Journal entries for reoayment of the note payable on 1 May 2020
Note payable A/C dr ........... $ 90,000
Interest payable A/C dr........ $ 4,800
Interest expense A/C dr........$ 2,400
To Bank A/C Cr. ...................$ 97,200
