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Accounting - interest & journal entry (Montag Company)

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Montag Co. entered into the following transactions involving short-term liabilities in 2008 and 2009.

2008

Apr. 20 Purchased $48,250 of merchandise on credit from Locust, terms are 1/10, n/30. Montag uses the perpetual inventory system.
May 19 Replaced the April 20 account payable to Locust with a 120-day, $39,000 note bearing 9% annual interest along with paying $9,250 in cash.
July 8 Borrowed $120,000 cash from National Bank by signing a 120-day, 8.5% interest-bearing note with a face value of $120,000.
__?__ Paid the amount due on the note to Locust at the maturity date.
__?__ Paid the amount due on the note to National Bank at the maturity date.
Nov. 28 Borrowed $60,000 cash from Fargo Bank by signing a 60-day, 8% interest-bearing note with a face value of $60,000.
Dec. 31 Recorded an adjusting entry for accrued interest on the note to Fargo Bank.

2009

__?__ Paid the amount due on the note to Fargo Bank at the maturity date.

1.
value:
4 points

Requirement 1:
Determine the maturity date for each of the three notes described.

Locust Natl. Bank Fargo
Maturity date
Check My Work References
Worksheet Difficulty: Hard Learning Objective: 09-P1

2.
value:
4 points

Requirement 2:

Determine the interest due at maturity for each of the three notes. (Assume a 360-day year. Omit the "$" sign in your response.)

Locust Natl. Bank Fargo
Interest due at maturity $ $ $
Check My Work References
Worksheet Difficulty: Hard Learning Objective: 09-P1

3.
value:
5 points

Requirement 3:
Determine the interest expense to be recorded in the adjusting entry at the end of 2008. (Enter 0 if no interest is to be accrued. Assume a 360-day year. Omit the "$" sign in your response.)

Locust Natl. Bank Fargo Total
Accrued interest expense $ $ $ $
Check My Work References
Worksheet Difficulty: Hard Learning Objective: 09-P1

4.
value:
5 points

Requirement 4:
Determine the interest expense to be recorded in 2009. (Omit the "$" sign in your response.)

Interest on Fargo note in 2009 $
Check My Work References
Worksheet Difficulty: Hard Learning Objective: 09-P1

5.
value:
5 points

Requirement 5:

Prepare journal entries for all the preceding transactions and events for years 2008 and 2009. (Omit the "$" sign in your response.)

2008

Date General Journal Debit Credit
Apr. 20

May 19

July 8

Nov. 28

Dec. 31

2009

Date General Journal Debit Credit

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Solution Summary

The solution computes interest & journal entry for Montag Company.

$2.19