Question

Watunga County Bank agrees to lend Vaughn Granite Company $599000 on January 1. Vaughn Granite Company signs a $599000, 8%, 9-month note. The entry made by Vaughn Granite on January 1 to record the proceeds and issuance of the note is

Cash 599000
Interest Expense 35940
Notes Payable 599000
Interest Payable 35940
Interest Expense 35940
Cash 563060
Notes Payable 599000
Cash 599000
Notes Payable 599000
Cash 599000
Interest Expense 35940
Notes Payable 634940
What is the adjusting entry requited if Hoffman Granite Company prepares financial statements on June 30th?

Answer 1

DR Cash $599,000

CR Notes Payable $599,000

Step-by-step explanation:

As this is the entry for the issuance of the note, interest will not be recorded as it is incurred as during the loan period.

Entry will be;

Date Details Debit Credit

Jan 1 Cash 599,000

Notes Payable 599,000