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20 February, 07:31

Great Adventures obtains a $30,000 low-interest loan for the company from the city council, which has recently passed an initiative encouraging business development related to outdoor activities. The loan is due in three years, and 6% annual interest is due each year on July 31. Record the appropriate journal entry.

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  1. 20 February, 08:33
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    The journal entry at the time when great adventures obtains the $30,000 loan is:

    Account Title Debit Credit

    Cash 30,000

    Notes Payable 30,000

    The interest accrued at the end of each month would be:

    30,000 * 6% = 1,800/12 = $ 150

    Interest entry would be made at the end of each month to record the interest expense.
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