Question

On September 1, 2017, Banner Co. borrowed $70,000 from the City Bank for five months at 9%. Interest was properly accrued on December 31, 2017. What entry is needed to record the payment of the note and accrued interest on the due date?

Answer 1

Explanation: Journal Entry

Loan Borrowed is $70,000

Interest rate is 9%

Interest accrued = 70,000 * 9% = 6,300

1. Cr: Bank $76,300

Dr: Short Term Loan $70,000

Dr: Accrued Int on loan $6,300

Being loan repayment with accrued interest on loan for 5 months.