December 1, 2004 company borrowed 80,000 by signing a 120 day, 6% note.

a) journal entry for the borrowing on dec. 1, 2004

b) accural entry for dec 1 2004

c) the repayment of note with interest


I Got

A) December 1
Db Cash 80,000
Cr Notes payable 80,000

b) December 31 2004

Db Interest expense 400
Cr Interest payable 400

c) unsure

Part A – correct

Part B – I am assuming you mean the entry for Dec. 31, not Dec. 1 as you wrote.

Therefore assuming a Dec. 31 entry, you are correct if basing it on 5 months. If you go by days, the amount is a few dollars higher than $400.

Part C
Dr. Interest Expense 1,600
Dr. Interest Payable 400
Dr. Notes Payable 80,000
Cr. Cash 82,000