Rose Company provided the following selected transactions related to liabilities: 2020 Feb. 1 Negotiated a revolving credit agreement with Second Bank which can be renewed annually upon bank approval. The amount available under the line of credit is P30,000,000 at the prime bank rate. April 1 Arranged a 3-month bank loan of P12,000,000 with Second Bank under the line of credit agreement. Interest at the prime rate of 8% was payable at maturity. July 1 Paid the 8% note at maturity. Nov. 1 Supported by the credit line, Rose Company issued P20,000,000 of commercial paper on a nine-month note. Interest was discounted at

Rose Company provided the following selected transactions related to liabilities: 2020 Feb. 1 Negotiated a revolving credit agreement with Second Bank which can be renewed annually upon bank approval. The amount available under the line of credit is P30,000,000 at the prime bank rate. April 1 Arranged a 3-month bank loan of P12,000,000 with Second Bank under the line of credit agreement. Interest at the prime rate of 8% was payable at maturity. July 1 Paid the 8% note at maturity. Nov. 1 Supported by the credit line, Rose Company issued P20,000,000 of commercial paper on a nine-month note. Interest was discounted at

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

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Problem 8-4 (IAA)
Rose Company provided the following selected transactions
related to liabilities:
2020
Feb. 1 Negotiated a revolving credit agreement with
Second Bank which can be renewed annually upon
bank approval.
The amount available under the line of credit is
P30,000,000 at the prime bank rate.
April 1 Arranged a 3-month bank loan of P12,000,000 with
Second Bank under the line of credit agreement.
Interest at the prime rate of 8% was payable at
maturity.
July 1 Paid the 8% note at maturity.
Nov. 1 Supported by the credit line, Rose Company
issued P20,000,000 of commercial paper on a
nine-month note. Interest was discounted at
issuance at a 6% discount rate.
Dec. 31 Recorded any necessary adjusting entry.
2021
Aug. 1 Paid the commercial paper at maturity.
Required:
Prepare the appropriate journal entries through the
maturity of each liability.

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