Question

On November 1, 2021, Quantum Technology, a geothermal energy supplier, borrowed $19 million cash to fund a geological Survey. The loan was made by Nevada BancCorp under a noncommitted short-term line of credit arrangement Quantum issued a nine-month, 12% promissory note. Interest was payable at maturity. Quantum's fiscal period is the calendar year Required: 1. Prepare the journal entry for the issuance of the note by Quantum Technology 2. & 3. Prepare the appropriate adjusting entry for the note by Quantum on December 31, 2021 and journal entry for the payment of the note at maturity (For all requirements, if no entry is required for a transaction/event, select "No journal entry required in the first account field. Enter your answers in whole dollars.) View transaction list Journal entry worksheet Record the issuance of the note by Quantum Technology General Jours Debit Credit

Answer 1

Answer
Journal
No	Date	General Journal	Debit	Credit
1	November 1, 2021,	Cash	$    19,000,000
		Note payable		$   19,000,000
2	December 31, 2021	Interest expense	$         380,000
		Interest payable		$        380,000
		( To record Interest expense)
3	August 1, 2022	Note payable	$    19,000,000
		Interest payable	$         380,000
		Interest expense	$      1,330,000
		Cash		$   20,710,000
		( To record entry )
Interest expense on December 31, 2021= 19,000,000 x 12% x 2/12
$380,000
Interest expense on July 31, 2018 = 19,000,000 x 12% x 7/12
$1,330,000