Bank Note Issuance
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On September 1, 2011, Triton Entertainment borrowed $24 million cash to fund a new Fun Park. The loan was made by Nevada Bank under a non-committed short-term line of credit arrangement. Triton issued a 9-month, 12% promissory note. Interest was payable at maturity. Triton's fiscal period is the calendar year.
Required:
a. Prepare the journal entry for the issuance of the note by Triton.
b. Prepare the appropriate adjusting entry for the note by Triton on December 31, 2011.
c. Prepare the journal entry for the payment of the note at maturity.
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Solution Summary
For your review, I have attached a formatted MS Excel spreadsheet which contains a detailed illustration of the necessary journal entries required for the issuance of a bank note, and the accounting for interest expense and interest payable accounts.
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