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On September 1, Joe's Painting Service borrows $150,000 from National Bank on a 4-month, $150,000, 6% note. What entry must Joe's Painting Service make on December 31 before financial statements are prepared?
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On September 1, Joe's Painting Service borrows $150,000 from National Bank on a 4-month, $150,000, 6% note. What entry must Joe's Painting Service make on December 31 before financial statements are prepared?

User FriC
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1 Answer

2 votes

Answer:

Loan Account

DR loan Note Account with $150,000

DR Loan Interest Expenses with $3,000

CR Cash/Bank Account with $153,000

Step-by-step explanation:

the interest payable on the loan as at Dec 31 = $150,000 *6% *4/12 = $3,000

User David Hall
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