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).)

Question

Business

Gemma Burch

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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Speedy · Answer 1

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