On September 1, 2015, Newtown borrowed $250,000 from First National Bank, and signed a 9% note payable due in one year. Interest on the note is due at maturity. Required: Please show calculations Part a. Prepare the journal entry to record the borrowing transaction. Part b. Prepare the required adjusting entry on December 31, 2015. Part c. Prepare the journal entry to record the payment of the interest on September 1, 2016. Part d. Prepare the journal entry to record the payment of the note on September 1, 2016.
On September 1, 2015, Newtown borrowed $250,000 from First National Bank, and signed a 9% note payable due in one year. Interest on the note is due at maturity. Required: Please show calculations Part a. Prepare the journal entry to record the borrowing transaction. Part b. Prepare the required adjusting entry on December 31, 2015. Part c. Prepare the journal entry to record the payment of the interest on September 1, 2016. Part d. Prepare the journal entry to record the payment of the note on September 1, 2016.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:On September 1, 2015, Newtown borrowed $250,000 from First National
Bank, and signed a 9% note payable due in one year. Interest on the note
is due at maturity.
Required: Please show calculations
Part a. Prepare the journal entry to record the borrowing transaction.
Part b. Prepare the required adjusting entry on December 31, 2015.
Part c. Prepare the journal entry to record the payment of the interest on
September 1, 2016.
Part d. Prepare the journal entry to record the payment of the note on
September 1, 2016.
Expert Solution
Step 1 Introduction
Notes payable are the type of promissory notes which are issued in writing to repay the interest and principal amount of the loan which is borrowed. Such notes payable are short-term (due within 1 year) or long-term (due for payment above 1 year) in nature. Notes payable include many categories which include notes with a single one-time payment of interest and principal or notes with regular interest payment.
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