Answer:
1. Nov 1, 2018
Cash 6,000,000
Notes Payable (short-term) 6,000,000
2. Dec 31, 2018
Interest Expense 80,000
Interest Payable 80,000
3. Apr 30, 2019
Notes payable (short-term) 6,000,000
Interest Payable 80,000
Interest Expense 160,000
Cash 6,240,000
Explanation:
1. $6,000,000 cash Mattel acquired from Metropolitan Bank for signing a short-term note (matures in six months).
2. 6,000,000 x .08 x 2/12 = 80,000
2 months (Nov and Dec) time that Mattel accrued $80,000 worth of interest.
3. The note was signed for 6,000,000.
Interest payable is the amount that was accrued from the last year, but hasn't been paid yet for $80,000.
Interest expense is the interest amount that is from the current year and is being repaid for $160,000.
Cash is the total (the principal payment and the interest) that Mattel is paying the bank back for borrowing for $6,240,000.
The journal entries of the given case are given in the image below.
Journal entry is the systematic record of the accounting transactions that is commenced under the usual business in cash. It is the financial transactions.
It is also referred to as the primary accounting procedure, means the financial statement is prepared on the basis of journal entry.
Computation of the amount of journal entry:
On November 2018, the amount of $6,000,000 cash Mattel grown from Metropolitan Bank for signing a short-term note that matures in 6 months.
On December 31, 2018, Mattel accrued $80,000 worth of interest, means :
[tex]= \$6,000,000 \times .08 \times \dfrac{2}{12} \\= \$80,000[/tex]
Then the amount of Cash is the total, means the principal payment and the interest is that Mattel is paying the bank back for borrowing for $6,240,000 ( [tex]\$6,000,000 + \$80,000 + \$160,000[/tex]).
Therefore, the journal entries of the above transactions are given in the image below.
Learn more about the journal entry, refer to:
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