Question

The following selected transactions relate to liabilities of United Insulation Corporation. United's fiscal year ends on December 31 2021 Jan. 13 Negotiated a revolving credit agreement with Parish Bank that can be renewed annually upon bank approval. The amount available under the line of credit is $25.8 million at the bank's prime rate. Feb. 1 Arranged a three-month bank loan of $1.5 willion with Parish Bank under the line of credit agreement. Interest at the prime rate of 6% was payable at maturity. May 1 Paid the 6% note at maturity. Dec. 1 Supported by the credit line, issued $15.3 million of commercial paper on a nine-month note. Interest was discounted at issuance at a 5% discount rate. 31 Recorded any necessary adjusting entry(). 2022 Sept. 1 Paid the commercial paper at maturity. Required: Prepare the appropriate journal entries through the maturity of each liability (If no entry is required for a transaction/event, select "No journal entry required in the first account field. Do not round intermediate calculations. Enter your answers in whole dollars.)

Answer 1

Journal Entry- United insulation Corporation
Date	Account Tittle	Debit	Credit
13-Jan-21	No Entry
1-Feb-21	Cash	$25,000,000
	Notes Payable		$25,000,000
1-May-21	Notes Payable	$25,000,000
	Interest Expense (25000000*6%*3/12)	$375,000
	Cash		$25,375,000
1-Dec-21	Cash (bal)	$14,726,250
	Discount On Notes Payable (15,300,000*5%*9/12)	$573,750
	Notes Payable		$15,300,000
31-Dec-16	Interest Expense	$63,750
	Discount On Notes Payable		$63,750
	(573750*1/9)
1-Sep-22	Interest Expense (573750*8/9)	$510,000
	Discount On Notes Payable		$510,000
1-Sep-22	Notes Payable	$15,300,000
	Cash		$15,300,000