70.2K

Verified Solution

Link Copied!

Recording Entries for short-term Notes Payable Masy's Department Store supported its operations through short-term note financing in 2020 described as follows: May 10 The Company entered into a new credit agreement with certain financial institutions providing for revolving credit borrowings and letters of credit in an aggregate amount not to exceed $3.3 million. Interest rates are adjustable. Sep.30 The Company borrowed $1,100,000 on the revolving credit line, payable in 6 months, at an interest rate of 7.25%, due upon maturity. Nov. 30 Additional cash needed during peak holiday sale period was funded through the issuance of 60-day, $440,000 commercial paper, discounted at 49. Jan. 29 Paid off the commercial paper debt on due date. Mar. 31 Paid off the balance of $1,100,000 on the revolving credit line plus interest. Record the following journal entries, assuming a 360-day year for interest computations: a. May 10Entering into credit line agreement. b. September 30Issuance of $1,100,000 note payable. C. November 30Issuance of $440,000 commercial paper. Compute the discount on note payable using 360 days as the base for prorating interest. d. December 31Adjusting entries. For the $440,000 note, compute interest accrual based upon exact number of days outstanding. e. January 29Payment of $440,000 commercial paper. f. March 31Payment of $1,100,000 note payable. Note: List multiple debits or credits (when applicable) in alphabetical order. Note: Round your answers to the nearest whole dollar. Note: If a line in a journal entry isn't required for the transaction, select "N/A" as the account names and leave the Dr. and Cr. answers blank (zero). Dr. Cr. 0 0 Date Account Name a May 10 N/A N/A b. Sept. 30 Salaries Payable Discount on Note Payable c. Nov. 30 450,000 450.000 178,800 178.800 d. Dec. 31 620 620 To record adjusting entry for note issued on Sept. 30 Dec. 31 To record adjusting entry for note issued on Nov. 30 e. Jan. 29 f. Mar. 31

Answer & Explanation Solved by verified expert

See Answer