Reporting Notes Payable and Calculating Interest Expense LO 9-3

North Face is one of the world's most popular outdoor apparel companies. Assume that North Face borrows $3.0 million from U.S. Bank and signs a note promising to pay back the $3.0 million in eight months, at which time North Face also will pay any accrued interest. The interest rate on the note is 8 percent.

Required:

1. Prepare the journal entry North Face will record when it signs the note and receives the cash.
2. Prepare the journal entry that North Face will record when it pays off the note and any accrued interest after eight months.