Answer:
Aug 1
Dr Cash 20,300,000
Cr Notes payable 20,300,000
Dec 31
Dr Interest expense 510,000
Cr Interest payable 510,000
Jan 31
Dr Notes payable 20,400,000
Dr Interest expense 102,000
Dr Interest payable 522,500
Cr Cash 21,024,500
Explanation:
Trico Technologies Journal entries
Aug 1
Dr Cash 20,300,000
Cr Notes payable 20,300,000
Dec 31
Dr Interest expense 510,000
Cr Interest payable 510,000
(20,400,000*5/12*6%)
Jan 31
Dr Notes payable 20,400,000
Dr Interest expense 102,000
($20,400,000×1/12*6%)
Dr Interest payable 522,500
(20,400,000*5/12*6%)
Cr Cash 21,024,500
Answer:
August 1,2018
Issuance of Note
Dr. Cash $20,300,000
Cr. Note payable $20,300,000
December 31,2018
Interest Accrued
Dr. Interest Expense $507,500
Cr. Interest payable $507,500
February 1, 2019
Payment of Note
Dr. Note Payable $20,300,000
Dr. Interest Payable $507,500
DR. Interest Expense $101,500
Cr. Cash $20,909,000
Explanation:
Note Payable is promise in writing to pay a sum of money in future. The money normally consists of Principal and interest.
Principal value = $20,300,000
The interest of 5 months is accrued at December 31 and it will be recorded.
Payment of Interest and Principal is made on February 1,2019
Accrued Interest = $20,300,000 x 6% x 5/12 = $507,500
Interest Expense on maturity = $20,300,000 x 6% x 1/12 = $101,500
