Organic Farmers Co-Op borrows $100,000 cash on December 1, 2018, by signing a 180-day, 12% note with

Question:

Organic Farmers Co-Op borrows $100,000 cash on December 1, 2018, by signing a 180-day, 12% note with a face value of $100,000.

1. How much interest expense results from this note in 2018? (Assume a 360-day year.)

2. How much interest expense results from this note in 2019? (Assume a 360-day year.)

3. Prepare journal entries to record (a) issuance of the note, (b) accrual of interest at the end of 2018, and (c) payment of the note at maturity. (Assume no reversing entries are made.)

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...

Fantastic news! We've Found the answer you've been seeking!