On December 1, 2018, Foggy Bottom Co. borrowed $360,000 from Atlantic National Bank, and signed a 9% note payable due in one year. Interest on the note is due at maturity.Required:Part a. Prepare the journal entry to record the borrowing transaction.Part b. Prepare the required adjusting entry on December 31, 2018.Part c. Prepare the journal entry to record the payment of the interest on December 1, 2019.Part d. Prepare the journal entry to record the payment of the note on December 1, 2019.
What will be an ideal response?
Part a
| 12/01/18 | Cash | 360,000 | ? |
| ? | Note Payable | ? | 360,000 |
| 12/31/18 | Interest Expense ($360,000 × 0.09 × 1/12) | 2,700 | ? |
| ? | Interest Payable | ? | 2,700 |
| 12/01/19 | Interest Payable | 2,700 | ? |
| ? | Interest Expense ($360,000 × 0.12 × 11/12) | 29,700 | ? |
| ? | Cash | ? | 32,400 |
| 12/01/19 | Note Payable | 360,000 | ? |
| ? | Cash | ? | 360,000 |
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