On December 1, 2018, ABC signed a $300,000, 5%, six-month note payable with the amount borrowed plus accrued interest due six months later on June 1, 2019. ABC records the appropriate adjusting entry for the note on December 31, 2018. What amount of cash will be needed to pay back the note payable plus any accrued interest on June 1, 2019?

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Zviko Zviko · Answer 1 · 2020-07-25T04:32:07+02:00

Answer:

$315,000 will be needed to pay back

Explanation:

When the note payable is signed, the entries would be as follows :

Cash $300,000 (debit)

Note Payable $300,000 (credit)

Interest that accrues over the period of the over the note receivable is

Interest expense $15,000 (debit)

Note Payable $15,000 (credit)

Interest expense = $300,000 × 5%

= $15,000

On June 1, 2019 the Note Payable plus Interest that needs to be paid would be :

Note Payable $315,000 (debit)

Cash $315,000 (credit)

andromache andromache · Answer 2 · 2022-03-29T16:28:52+02:00

The amount of cash should be $315,000 will be needed to payback.

At the time When the note payable is signed, the entries should be

Cash $300,000 (debit)

Note Payable $300,000 (credit)

Interest that accrues over the period of the over the note receivable should be

Interest expense $15,000 (debit)

Note Payable $15,000 (credit)

here,

Interest expense = $300,000 × 5%

= $15,000

On June 1, 2019, the Note Payable plus Interest that needs to be paid should be

Note Payable $315,000 (debit)

Cash $315,000 (credit)

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