DIRECTIONS:
Use the information from E10-1; the firm borrowed $6 million on 11/1/2018, 8% rate, 6-month loan You will need 4 entries (though you can combine the last two entries):
o 11/1/2021
o 12/31/2021
o 4/30/2022 to pay interest
o 4/30/2022 to pay back the principle
Don’t forget to record the effects, as well as the combined total of all the entries in one last column help calculate the problem and report the effects using assets, liability, equity, revenue, expenses, net income

Transcribed Image Text:

Many businesses borrow money during periods of increased business activity to finance inventory and accounts receivable. For example, Mattel builds up its inventory to meet the needs of retailers selling to Christmas shoppers. A large portion of Mattel's sales are on credit. As a result, Mattel often collects cash from its sales several months after Christmas. Assume on November 1, 2021, Mattel borrowed $6 million cash from Metropolitan Bank and signed a promissory note that matures in six months. The interest rate was 8 percent payable at maturity. The accounting period ends December 31. Many businesses borrow money during periods of increased business activity to finance inventory and accounts receivable. For example, Mattel builds up its inventory to meet the needs of retailers selling to Christmas shoppers. A large portion of Mattel's sales are on credit. As a result, Mattel often collects cash from its sales several months after Christmas. Assume on November 1, 2021, Mattel borrowed $6 million cash from Metropolitan Bank and signed a promissory note that matures in six months. The interest rate was 8 percent payable at maturity. The accounting period ends December 31.

Answer rating: 100% (QA)

Answer As per given Conditions Date Assets liabilities Equity 1112021 cash 6000000 notes payable 6... View the full answer