Question

# On June 1, Pharoah Company Ltd. borrows \$60,000 from Acme Bank on a 6-month, \$60,000, 6%...

On June 1, Pharoah Company Ltd. borrows \$60,000 from Acme Bank on a 6-month, \$60,000, 6% note. The note matures on December 1.

Prepare the entry on June 1. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Date

Account Titles and Explanation

Debit

Credit

June 1

enter an account title

enter a debit amount

enter a credit amount

enter an account title

enter a debit amount

enter a credit amount

Prepare the adjusting entry on June 30. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Date

Account Titles and Explanation

Debit

Credit

June 30

enter an account title

enter a debit amount

enter a credit amount

enter an account title

enter a debit amount

enter a credit amount

Prepare the entry at maturity (December 1), assuming monthly adjusting entries have been made through November 30. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Date

Account Titles and Explanation

Debit

Credit

Dec. 1

enter an account title to record the transaction on December 1

enter a debit amount

enter a credit amount

enter an account title to record the transaction on December 1

enter a debit amount

enter a credit amount

enter an account title to record the transaction on December 1

enter a debit amount

enter a credit amount

What was the total financing cost (interest expense)?

 Total interest expense \$enter the total interest expense

 Date Accounts Titles and Explanations Debit Credit June 1 Cash \$ 60,000 Notes payable \$ 60,000 (To record the borrowing of Note) June 30 Interest expense     ( \$ 60,000 x 6% x 1/12) \$ 300 Interest payable \$ 300 (To record interest expense for June) Dec. 1 Notes payable \$ 60,000 Interest payable       ( \$ 60,000 x 6% x 6/12) \$ 1,800 Cash \$ 61,800 (To record payment of Note ) Total financing cost    = Note Amount x rate x Period \$ 60,000 x 6% x 6/12 \$ 1,800

#### Earn Coins

Coins can be redeemed for fabulous gifts.