Question

On June 1, Crane company borrows $99,000 from Acme Bank on a 6-month, $99,000, 8% note....

On June 1, Crane company borrows $99,000 from Acme Bank on a 6-month, $99,000, 8% note. the note matures on December 1st.

Prepare the entries for June 1st, June 30th, and the entry at maturity on December 1.

What is the total interest expense?
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Answer #1

JOurnal entry :

Date accounts & explanation debit credit
June 1 Cash 99000
    Notes payable 99000
(To record amount borrow)
June 30 Interest expense (99000*8%*1/12) 660
    Interest payable 660
(To record accured interest)
Dec 1 Notes payable 99000
Interest payable (660*6) 3960
    Cash 102960
(To record amount repaid)

Interest expense = 99000*8%*6/12 = 3960

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