Chieh,
Inc. issued a $300,000, four-year, 8% note at face value to Cedar Bank on
January 1, 2011, and received $300,000 cash. The note requires annual interest
payments each December 31. Prepare Chieh’s journal entries to record
(a)
The note issuance and
(b)
The December 31 interest payment.
|
(a)
|
Cash ...............................................................................................
|
300,000
|
|
|
|
Notes Payable.....................................................................
|
|
300,000
|
|
|
|
|
|
|
(b)
|
Interest
Expense.............................................................................
|
24,000
|
|
|
|
Cash ($300,000 X 8%)......................................................
|
|
24,000
|
