Question

On August 1, 2018, Trico Technologies, an aeronautic electronics company, borrows $21 million

cash to expand operations. The loan is made by FirstBanc Corp. under a short-term line of credit

arrangement. Trico signs a six-month, 9% promissory note. Interest is payable at maturity. FirstBanc

Corp.'s year-end is December 31.

a. Record the acceptance of the note by FirstBanc Corp.

b. Record the appropriate adjustment for the note by FirstBanc Corp. on December 31, 2018.

c. Record the receipt of cash by FirstBanc Corp. at maturity.

Answer 1

Answer: First Bank Corp journal $

August 1 2018

1.Trico Dr 21m

Creditor Cr. 21m

Narration. Issuance 21m, 9%, 6 months promissory note to Trico

Dec 31 2018

2. Trico Dr. 1,890,000

Interest income Cr. 1,890,00

Narration Interest payable on promissory note to Trico

December 31 2018

3 Bank Dr22,890,000

Trico. Cr. 22,890,000

Narration. payment of promissory notes and interest due on maturity.