Kwon Co. borrows $150,000 cash on November 1, 2011, by signing a 90-day, 9% note with a

Question:

Kwon Co. borrows $150,000 cash on November 1, 2011, by signing a 90-day, 9% note with a of $150,000.
1. On what date does this note mature? (Assume that February of 2011 has 28 days.)
2. How much interest expense results from this note in 2011? (Assume a 360-day year.)
3. How much interest expense results from this note in 2012? (Assume a 360-day year.)
4. Prepare journal entries to record
(a) Issuance of the note,
(b) Accrual of interest at the end of 2011, and
(c) Payment of the note at maturity.

Face Value
Face value is a financial term used to describe the nominal or dollar value of a security, as stated by its issuer. For stocks, the face value is the original cost of the stock, as listed on the certificate. For bonds, it is the amount paid to the...