Here are the journal entries for the transaction:
August 1, 2024
Cash 20,400,000
Notes Payable 20,400,000
(To record the $20.4 million notes payable)
December 31, 2024
Interest Expense 765,000
Notes Payable 765,000
(To record $765,000 of interest expense on the note at maturity)
July 31, 2025
Notes Payable 20,400,000
Cash 20,400,000
(To pay off the $20.4 million note payable)