On november 1, 2018, quantum technology, a geothermal energy supplier, borrowed $22 million cash to fund a geological survey. the loan was made by nevada banccorp under a noncommitted short-term line of credit arrangement. quantum issued a nine-month, 9% promissory note. interest was payable at maturity. quantum’s fiscal period is the calendar year. required: 1. prepare the journal entry for the issuance of the note by quantum technology. 2. & 3. prepare the appropriate adjusting entry for the note by quantum on december 31, 2018 and journal entry for the payment of the note at maturity.

when signing the note:

cash    22,000,000

    note payable       22,000,000

accrued interest at december 31th, 2018

interest expense 330,000 debit

     interest payable           330,000 credit

payment of the note:

payment of the note

note payable   22,000,000

interest payable    330,000

interest expense  1,185,000

                  cash                     23,485,000

Explanation:

adjusting entry:

principal x rate x time

22,000,000

rate 9% / 12 = 0.0075

months 2

We must express rate and time in the same metric, in this case, months

22,000,000 x 0.75 x 2 = 330,000 accrued interest

payment of the note:

22,000,000 x 0.75 x 9 = 1,485,000

already accrued                 330,000

interest expense               1,185,000

t

explanation:

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the clients (funders) and customers (individual nonprofit staff) are great to work with. that i can be open about being a person of faith when appropriate. the variety of my tasks each day.