Petalo Company borrowed $20 million cash on December 1, 2021, to provide working capital for year-wend inventory. Petalo issued a 4-month, 9% promissory note to FirstBank under a prearranged short-www mterm line of credit. Interest on the note was payable at maturity. Petalo Company period is the calendaryear.Required:1. Prepare the journal entries to record the issuance of the note Petalo Company on December 1, 2021w m2. Prepare the journal entries by Petalo to record all subsequent events related to the note throughMarch 31, 2022.3. Suppose the face amount of the note was adjusted to include interest (a noninterest-bearing note) and9% is the bank's stated "discount rate." Prepare the journal entries to record the issuance of thenoninterest-bearing note by Petalo Company on December 1, 2021. What would be the effective interestrate?

Issuance of promissory notes raises the current liability portion of the company. Sometimes, in…

Petalo Company borrowed $20 million cash on December 1, 2021, to provide working capital for year- ww mm end inventory. Petalo issued a 4-month, 9% promissory note to FirstBank under a prearranged short- term line of credit. Interest on the note was payable at maturity. Petalo Company period is the calendar wwwm m year. Required: 1. Prepare the journal entries to record the issuance of the note Petalo Company on December 1, 2021 2. Prepare the journal entries by Petalo to record all subsequent events related to the note through March 31, 2022. 3. Suppose the face amount of the note was adjusted to include interest (a noninterest-bearing note) and 9% is the bank's stated "discount rate." Prepare the journal entries to record the issuance of the noninterest-bearing note by Petalo Company on December 1, 2021. What would be the effective interest rate?

Petalo Company borrowed $20 million cash on December 1, 2021, to provide working capital for year- ww mm end inventory. Petalo issued a 4-month, 9% promissory note to FirstBank under a prearranged short- term line of credit. Interest on the note was payable at maturity. Petalo Company period is the calendar wwwm m year. Required: 1. Prepare the journal entries to record the issuance of the note Petalo Company on December 1, 2021 2. Prepare the journal entries by Petalo to record all subsequent events related to the note through March 31, 2022. 3. Suppose the face amount of the note was adjusted to include interest (a noninterest-bearing note) and 9% is the bank's stated "discount rate." Prepare the journal entries to record the issuance of the noninterest-bearing note by Petalo Company on December 1, 2021. What would be the effective interest rate?

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter9: Current Liabilities And Contingent Obligations

Section: Chapter Questions

Problem 3E: Non-Interest-Bearing Notes Payable On November 16, 2019, Clear Glass Company borrowed 20,000 from...

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On December 1 of the current year, Jordan Inc. assigns 125,000 of its accounts receivable to McLaughlin Company for cash. McLaughlin Company charges a 750 service fee, advances 85% of Jordans accounts receivable, and charges an annual interest rate of 9% on any outstanding loan balance. Prepare the related journal entries for Jordan.
On December 1 of the current year, Jordan Inc. assigns 125,000 of its accounts receivable to McLaughlin Company for cash. McLaughlin Company charges a 750 service fee, advances 85% of Jordans accounts receivable, and charges an annual interest rate of 9% on any outstanding loan balance. Prepare the related journal entries for Jordan. Refer to RE6-10. On December 31, Jordan Inc. received 50,000 on assigned accounts. Prepare Jordans journal entries to record the cash receipt and the payment to McLaughlin.
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