MGCR Inc. has a January 31 fiscal year-end date for its annual financial statements. MGCR Inc. borrowed $300,000 cash and issued a note to GE Capital on February 1, 2016. According to the agreement between MGCR Inc. and GE Capital, MGCR Inc. will make an equal repayment of $25,000 for the principal amount of the borrowing on the last days of both March and September. For example, the first principal repayment will occur on March 31, 2016, and the second principal repayment will occur on September 30, 2016. Interest is payable on the last days of March, June, September, and December. For example, the first interest payment will occur on March 31, 2016, and the second interest payment will occur on June 30, 2016. The loan carries an interest rate of 12% per year. Journal entries are made only when the cash transactions are involved during the year, with respect to the loan agreement between MGCR Inc. and GE Capital.

Provide journal entries that should be made by MGCR Inc. during the fiscal year of 2020. These journal entries are expected to be used for its preparation of annual financial statements. Show your calculations below each journal entry.

Journal entry on March 31, 2020

Dr)                                                                              Cr)

Journal entry on June 30, 2020

Dr)                                                                              Cr)

Journal entry on September 30, 2020

Dr)                                                                              Cr)

Journal entry on December 31, 2020

Dr)                                                                              Cr)

Show your calculations and how you obtained the debt and credit amounts.

Answer rating: 100% (QA)

WORKINGS Given in question 1 interest rate 12 pa 2 amount borrowed on FEB 12016 300000 3 equal repay... View the full answer