Part B Part C utneSu polnts 2 During 2018 Brown Capactor Cor

utneSu polnts) 2. During 2018, Brown Capactor Corp. did not have any short- term notes September 1, 2018 when it entered into a loan agreement with notes outstanding until . Brown ts primary bank Capacitor Corp. received $600,000 on September 1, 2018 as the proceeds from the loan and issued a nine-month promissory note bearing 7.5% annual interest to the bank. Under the terms of the note, Brown Capacitor Corp. was required to make quarterly interest payment the bank on December 1, March 1, and June 1 with the note\'s entire face value due with the third interest payment when the note matured on June 1, 2019. a. Prepare the general journal entry to record the proceeds from the loan and the t(s) on the of the note on September 1, 2018. Post the entry to the relevant T-accoun following page. (2 points entry+1 point for posting)

Solution

Accounst Title Dr Cr Part A` Cash $600,000 Promissory Notes payable $600,000 T accounts Promissory Notes payable Sep 1 2018 Cash $600,000 Cash Sep 1 2018 Promissory notes payable $600,000 Dec 1 2018 Interest exp 11250 end bal $588,750 Part B Dec 1 2018 Interest expenses 11250 Cash 11250 (600000*7.5%*3/12) T accounts Interest expenses Dec 1 2018 Cash $8,250 Dec 31 2018 Interest payable 3750 ending balance $12,000 Part C Dec 31 2018 Interest expenses 3750 Interest payable 3750 (600000*7.5%*1/12) T accounts Interest payable Dec 31 2018 Int exp 3750 end bal 3750