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28 July, 23:43

On November 1, Bahama Cruise Lines borrows $3.1 million and issues a six-month, 9% note payable. Interest is payable at maturity. Record the issuance of the note and the appropriate adjustment for interest expense at December 31, the end of the reporting period. (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field. Enter your answers in dollars, not in millions (i. e. 5 should be entered as 5,000,000).)

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  1. 29 July, 02:40
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    Nov 1

    Dr Cash $3,100,000

    Cr Notes Payable $3,100,000

    Dec 31

    Dr Interest expense $46,500

    Cr Interest payable $46,500

    Explanation:

    Bahama Cruise Lines

    Interest Expense = Face Amount x Interest Rate x Time Period

    = $3,100,000 x. 09 x 2/12 = $46,500

    Journal entries

    Nov 1

    Dr Cash $3,100,000

    Cr Notes Payable $3,100,000

    Dec 31

    Dr Interest expense $46,500

    Cr Interest payable $46,500
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