The following selected transactions relate to liabilities of Rocky Mountain Adventures. Rocky Mountain's fiscal year ends on

Question:

The following selected transactions relate to liabilities of Rocky Mountain Adventures. Rocky Mountain's fiscal year ends on December 31.
January 13 Negotiate a revolving credit agreement with First Bank that can be renewed annually upon bank approval. The amount available under the is $10 million at the bank's prime rate.
February 1 Arrange a three-month bank loan of $4 million with First Bank under the agreement. Interest at the prime rate of 7% is payable at maturity.
May 1 Pay the 7% note at maturity.
Required:
Record the appropriate entries, if any, on January 13, February 1, and May 1.
Line of Credit
A line of credit (LOC) is a preset borrowing limit that can be used at any time. The borrower can take money out as needed until the limit is reached, and as money is repaid, it can be borrowed again in the case of an open line of credit. A LOC is...