On July 1, Paxson Corporation takes out a 12%, two-month, $50,000 loan at Friendly National Bank. Principal
Question:
On July 1, Paxson Corporation takes out a 12%, two-month, $50,000 loan at Friendly National Bank. Principal and interest are to be repaid on August 31.
Required
1. Identify and analyze the transactions or adjustments for July 1 to record the borrowing, for July 31 to record the accrual of interest, and for August 31 to record repayment of the principal and interest.
2. Evaluate the following statement: It would be much easier not to bother with an adjustment on July 31 and simply record interest expense on August 31 when the loan is repaid.
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Step by Step Answer:
1 Transactions and Adjustments July 1 Borrowing Debit Cash 50000 Credit Notes Payable 50000 July 31 ...View the full answer
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Related Book For 
Using Financial Accounting Information The Alternative to Debits and Credits
ISBN: 978-1337491471
10th edition
Authors: Gary A. Porter, Curtis L. Norton
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