Question

On August 1, 2021, Trico Technologies, an aeronautic electronics company, borrows $20.2 million cash to expand operations. The loan is made by FirstBanc Corp. under a short-term line of credit arrangement. Trico signs a six-month, 6% promissory note. Interest is payable at maturity. Trico’s year-end is December 31. Record the necessary entries in the Journal Entry Worksheet below for Trico Technologies. (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).)

1. Record the issuance of note.

2. Record the adjusting entry for interest.

3. Record the repayment of the note at maturity.

Answer 1

Date	Accounts	Debit	Credit
Aug 1, 2021	cash	20200000
	Notes payable		20200000
Dec 31, 2021	interest expense(20200000*6%*5/12)	505000
	Interest payable		505000
Jan 1, 2022	Notes payable	20200000
	Interest expense (20200000*6%*1/12)	101000
	Interest payable	505000
	Cash		20806000