On April 1, Hoadley Company borrows $90,000 from Northwest Provincial Bank by signing a 6-month, 6%, interest-bearing

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Question:

On April 1, Hoadley Company borrows $90,000 from Northwest Provincial Bank by signing a 6-month, 6%, interest-bearing note. Hoadley’s year end is August 31.

Instructions

Prepare the following entries associated with the note payable on the books of Hoadley Company:

a. The entry on April 1 when the note was issued.

b. Any adjusting entries necessary on May 31 in order to prepare the quarterly financial statements. Assume no other interest accrual entries have been made.

c. The adjusting entry at August 31 to accrue interest.

d. The entry to record payment of the note at maturity.