Question

Metlock, Inc. borrows $76,800 on July 1 from the bank by signing a $76,800, 6%, 1-year note payable. (a) Prepare the journal entry to record the proceeds of the note. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit July 1 enter an account title to record the proceeds of the note on July 1 enter a debit amount enter a credit amount enter an account title to record the proceeds of the note on July 1 enter a debit amount enter a credit amount (b) Prepare the journal entry to record the accrued interest at December 31, assuming adjusting entries are made only at the end of the year. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit Dec. 31 enter an account title to record the accrued interest on December 31 enter a debit amount enter a credit amount enter an account title to record the accrued interest on December 31 enter a debit amount enter a credit amount

Answer 1

Journal entries

Step-by-step explanation:

The journal entries are as follows

a. Cash $76,800

To Note payable $76,800

(Being the issuance of the note is recorded)

b. Interest expense $2,304

To Interest payable $2,304

(Being the interest expense is recorded)

It is computed below:

= Borrowed amount × rate of interest × number of months ÷ total number of months in a year

= $76,800 × 6% × 6 months ÷ 12 months

= $2,304