On March 1, Year 1, a company loans cash to another company and accepts a note in return. The terms of the note are provided below. Issue Date Principal Rate Maturity Date March 1, Year 1 120,000 10% March 1, Year 4 Required: 1. Prepare the journal entry to be made when the company makes the loan and accepts the note in return. 2. Calculate the interest revenue to be recorded at the end of each year the note is outstanding. 3. Prepare the journal entries to accrue the interest receivable for each year the note is outstanding. 4. Prepare the journal entry to record receiving the cash at the note's maturity.
On March 1, Year 1, a company loans cash to another company and accepts a note in return. The terms of the note are provided below. Issue Date Principal Rate Maturity Date March 1, Year 1 120,000 10% March 1, Year 4 Required: 1. Prepare the journal entry to be made when the company makes the loan and accepts the note in return. 2. Calculate the interest revenue to be recorded at the end of each year the note is outstanding. 3. Prepare the journal entries to accrue the interest receivable for each year the note is outstanding. 4. Prepare the journal entry to record receiving the cash at the note's maturity.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:On March 1, Year 1, a company loans cash to another company and accepts a note in return.
The terms of the note are provided below.
Issue Date
Principal
Rate
Maturity Date
March 1, Year 1
120,000
10%
March 1, Year 4
Required:
1. Prepare the journal entry to be made when the company makes the loan and accepts the note in return.
2. Calculate the interest revenue to be recorded at the end of each year the note is outstanding.
3. Prepare the journal entries to accrue the interest receivable for each year the note is outstanding.
4. Prepare the journal entry to record receiving the cash at the note's maturity.
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