Notes and Interest

Glencoe Inc. operates with a June 30 year-end. During 2016, the following transactions occurred:

January 1: Signed a one-year, 10% loan for $25,000. Interest and principal are to be paid at maturity.

January 10: Signed a line of credit with Little Local Bank to establish a $400,000 line of credit. Interest of 9% will be charged on all borrowed funds.

February 1: Issued a $20,000 non-interest-bearing, six-month note to pay for a new machine. Interest on the note, at 12%, was deducted in advance.

March 1: Borrowed $150,000 on the line of credit.

June 1: Repaid $100,000 on the line of credit plus accrued interest.

June 30: Made all necessary adjusting entries.

August 1: Repaid the non-interest-bearing note.

September 1: Borrowed $200,000 on the line of credit.

November 1: Issued a three-month, 8%, $12,000 note in payment of an overdue open account.

December 31: Repaid the one-year loan [from transaction (a)] plus accrued interest.

Record all journal entries necessary to report these transactions. When calculating interest use full months instead of days. Do not round intermediate calculations. If required, round your final answers to the nearest dollar. Indicate the effect on financial statement items by selecting "" for decrease (or negative effect), "+" for increase (or positive effect) and "NE" for No Entry (or no effect) on the financial statement.

(ONLY DO THIS ONE)1. January 10: Signed a line of credit with Little Local Bank to establish a $400,000 line of credit. Interest of 9% will be charged on all borrowed funds.

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(Fill the form above) 2. As of December 31, which notes are outstanding? How much interest is due on each? Do not round intermediate calculations. If required, round your final answers to the nearest dollar.

Outstanding Debt Line of credit 8% Note Principal Balance $500,000 X $12,000 Interest Payable 3,750 X 120 X