Question

On November 1, 2021, Quantum Technology, a geothermal energy supplier, borrowed $8 million cash to fund a geological survey. The loan was made by Nevada BancCorp under a noncommitted short-term line of credit arrangement. Quantum issued a nine-month, 12% promissory note. Interest was payable at maturity. Quantum’s fiscal period is the calendar year.

Required:

1. Prepare the journal entry for the issuance of the note by Quantum Technology.

2. & 3. Prepare the appropriate adjusting entry for the note by Quantum on December 31, 2021 and journal entry for the payment of the note at maturity. (For all requirements, if no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in whole dollars.)

Answer 1

Answer: Quantum Journal $

November 1 2021

1. Bank Dr. 8,000,000

Nevada Banccorp Cr. 8,000,000

Narration. Issuance of 8m 12% 9 month promissory note

2. December 31 2021

Interest Expenses Dr 106,667

Nevada Banccorp Cr. 106,667

Narration. One month interest due on promissory note issued to Banccorp

August 31 2022

3. Banccorp Dr 8,960,000

Bank. CR 8,960,000

Narration. Payment of principal and interest on promissory note of 8m, 12%,9months promissory note issued to Banccorp.

Step-by-step explanation: