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Exercise 1: Short-Term Notes Payable: Use the t-accts below to record the following entries. If...

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Accounting

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Exercise 1: Short-Term Notes Payable: Use the t-accts below to record the following entries. If you get stuck, carefully review the online and text examples. On September 1st, Geo Inc. borrows $2,400 from State Bank and signs a 10 month short-term note payable. The interest rate on the note is 7%. Even though the note is only for 10 months, the interest rate is an annual rate (see interest calculations below) a) Record the entry to borrow the money from the bank. b) Next, record the accrual of interest at December 31st c) Finally, record the accrual of interest on June 30th. 2,400 x 0.07 x 6/12- $84 (Jan - June) d) Record the entry to pay the interest on June 30th e) Record the entry to re-pay the principal balance of the loan 2,400 x 796 x 4/12-$56 (Sept-Dec) Note Payable Interest Payable Interest Expense Cash

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