Question

North Face is one of the world's most popular outdoor apparel companies. Assume that North Face borrows $2 million from U.S. Bank and signs a note promising to pay back the $2 million in nine months, at which time North Face also will pay any accrued interest. The interest rate on the note is 8%.

Required:

1. Prepare the journal entry North Face will record when it signs the note and receives the cash. (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 not in millions (i.e., 1,000,000 not 1.0).)

. Prepare the journal entry that North Face will record when it pays off the note and any accrued interest after nine months. (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 not in millions (i.e., 1,000,000 not 1.0).)

Answer 1

General Journal	Debit	Credit
No Entry at the time of singing the note
Entry at the time of receiving cash
Cash	$2,000,000
Notes Payable		$2,000,000
(To record cash borrowed from US Bank against notes)
Entry at the time of payoff the note and accrued interest after nine month
Notes Payable	$2,000,000
Interest Expense ($2,000,000*8%*9 months / 12)	$120,000
Cash		$2,120,000
(To record payoff of note and accrued interest)

Hope the above calculations, working and explanations are clear to you and help you to understand the concept of question.... please rate my answer...in case any doubt, post a comment and I will try to resolve the doubt ASAP…thank you