Question

The following selected transactions relate to liabilities of United Insulation corporation. United's fiscal year ends on December 31,2018. February 1. Arranged a three month bank loan of $5 million with Parish bank under the line of credit agreement. Interest at the prime rate of 10% was payable at maturity. Required: Prepare the appropriate journal entries through the maturity of each liability for the 2018

Answer 1

The answer has been presented in the supporting sheet. All the parts has been solved with detailed explanation and calculation. For detailed answer refer to the supporting sheet.

Credit Answer 2 Part 1) 3 Date Account and Explanation 4 February 1, 2018 Cash Bank Loan (To record bank loan from bank) Debit $ 50,00,000 $ 50,00,000 9 Part 2) 10 Date 11 May 1, 2018 Credit Account and Explanation Bank Loan Interest expense Cash (To record repayment of bank loan) Debit $ 50,00,000 $ 1,25,000 $ 51,25,000