On August 31, 2011, a company borrows $50,000 from its bank and signs a note promising to repay $53,600 in one year. There is no mention of interest in the loan agreement. The company's fiscal year end is December 31.
Required:
a. Give the journal entry to record the issuance of the note on August 31, 2011.
b. Would an adjusting entry be required on December 31, 2011, related to this note? If so, give the entry.
c. How much interest expense (if any) would be reported on the company's statement of earnings for the year ended December 31, 2012?
d. Give the journal entries to record the repayment of the loan when the note matures on August 31, 2012.