this exercise will review the journal entries involved for an interest bearing note 610352

This exercise will review the journal entries involved for an interest-bearing note payable.

On November 1, 2014, Bono Company borrowed $80,000 from National Bank and signed a note stipulating that $80,000 was to be repaid in 6 months with interest at 12%. Bono Company adjusts its accounts and prepares financial statements annually on December 31

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Instructions

(a) Prepare the journal entry on November 1, 2014, to record the loan.

(b) Prepare the adjusting entry on December 31, 2014.

(c) Prepare the journal entry at maturity (May 1, 2015).

(d) Determine the total financing cost (interest expense) for the six-month period.

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