Question

On November 7, 2017, Mura Company borrows $240,000 cash by signing a 90-day, 11% note payable with a face value of $240,000. (Use 360 days a year. Do not round your intermediate calculations.) 1. Compute the accrued interest payable on December 31, 2017. 2. & 3. Prepare the journal entry to record the accrued interest expense at December 31, 2017 and payment of the note at maturity.

Answer 1

Face Value of Note 240000 Coupon Rate 11% 90 days November 7, 2017 Term Signing date 1 Accrued Interest payable 240000*11%*55/360 4,033.33 2 31-Dec-17 Dr Interest 4,033.33 Cr Interest Payable 4,033.33 05-Feb-18 Dr 11% Note Payable 240000 Cr Cash 240000 (Note paid on maturity) [240000*11%*35/360] 05-Feb-18 Dr Interest 2,566.67 Dr Interest Payable 4,033.33 6600 [240000*11%*90/360] Cr Cash (Interest paid on maturity)