Crane Construction Ltd. borrowed $280,000 from Atco Finance Ltd. on October 1, 2020, by issuing a nine month note payable at 7% interest payable at maturity. Both companies have a December 31 year end and make adjusting entries annually. (a) Your answer is partially correct. For Crane Construction, record (1) the receipt of the $280,000 cash and the issuing of the note payable on October 1, 2020; (2) the accrual of interest on December 31, 2020; and (3) the payment of the note and interest on July 1, 2021. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. List all debit entries before credit entries.)
Crane Construction Ltd. borrowed $280,000 from Atco Finance Ltd. on October 1, 2020, by issuing a nine month note payable at 7% interest payable at maturity. Both companies have a December 31 year end and make adjusting entries annually. (a) Your answer is partially correct. For Crane Construction, record (1) the receipt of the $280,000 cash and the issuing of the note payable on October 1, 2020; (2) the accrual of interest on December 31, 2020; and (3) the payment of the note and interest on July 1, 2021. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. List all debit entries before credit entries.)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Crane Construction Ltd. borrowed $280,000 from Atco Finance Ltd. on October 1, 2020, by issuing a nine-month note payable at 7%
interest payable at maturity. Both companies have a December 31 year end and make adjusting entries annually.
(a)
Your answer is partially correct.
For Crane Construction, record (1) the receipt of the $280,000 cash and the issuing of the note payable on October 1, 2020; (2)
the accrual of interest on December 31, 2020; and (3) the payment of the note and interest on July 1, 2021. (Credit account titles
are automatically indented when the amount is entered. Do not indent manually. List all debit entries before credit entries.)
Date
Oct. 1. 2020
Dec. 31.2020
Account Titles and Explanation
Cash
Notes Payable
Interest Expense
Debit
280000
4900
Cred
Transcribed Image Text:Date
Oct. 1, 2020.
Dec. 31.2020 -
July 1, 2021
July 1, 2021
V
Account Titles and Explanation
Cash
Notes Payable
Interest Expense
Interest Payable
Notes Payable
Interest Expense
(To record interest)
Interest Payable
Cash
Interest Payable
(To record repayment of bank loan)
280000
4900
280000
9800
100
4900
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