Chapter 4, Problem 8E

a.

To determine

Calculate the amount of interest expense over the life of the note and the monthly interest expense.

b.

To determine

Identify the amount of the liability to the bank by Company J as at December 31, Year 1.

c.

To determine

Prepare the journal entry to record the note payable on October 31, Year 1.

d.

To determine

Prepare the adjusting entry to record the accrued interest on the note as at December 31, Year 1.

e.

To determine

Identify the amount of liability to bank if the balance sheet is prepared on March 31, Year 2.