The Eldorado Corporation’s controller prepares adjusting entries only at the end of the reporting year. The following adjusting entries were prepared on December 31, 2021: DebitCreditInterest expense3,240 Interest payable 3,240Rent expense8,250 Prepaid rent 8,250Interest receivable300 Interest revenue 300 Additional information:The company borrowed $108,000 on March 31, 2021. Principal and interest are due on March 31, 2022. This note is the company’s only interest-bearing debt.Rent for the year on the company’s office space is $33,000. The rent is paid in advance.On October 31, 2021, Eldorado lent money to a customer. The customer signed a note with principal and interest at 3.0% due in one year. Required:1. What is the interest rate on the company's note payable?2. The 2021 rent payment was made at the beginning of which month? (Do not round your intermediate calculation.)3. How much did Eldorado lend its customer on October 31?

Interest: The amount charged on borrowed principal amount called Interest.

Answered: The Eldorado Corporation’s controller…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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The Eldorado Corporation’s controller prepares adjusting entries only at the end of the reporting year. The following adjusting entries were prepared on December 31, 2021:

	Debit	Credit
Interest expense	3,240
Interest payable		3,240
Rent expense	8,250
Prepaid rent		8,250
Interest receivable	300
Interest revenue		300

Additional information:

The company borrowed $108,000 on March 31, 2021. Principal and interest are due on March 31, 2022. This note is the company’s only interest-bearing debt.
Rent for the year on the company’s office space is $33,000. The rent is paid in advance.
On October 31, 2021, Eldorado lent money to a customer. The customer signed a note with principal and interest at 3.0% due in one year.

Required:
1. What is the interest rate on the company's note payable?
2. The 2021 rent payment was made at the beginning of which month? (Do not round your intermediate calculation.)
3. How much did Eldorado lend its customer on October 31?

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