I-12.02 Problem

I-12.02 Problem - allocated to each month based on the...

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I-12.02 Following are selected borrowing transactions by Campus Housing Corporation. 1-Jun Campus purchased new furniture in exchange for a $500,000 promissory note. The note was due in 6 months and bears interest at 8% per annum. 1-Jul Borrowed cash of $90,000, giving a $100,000 one-year note. The interest is implicit in the difference between the cash borrowed and the note's $100,000 maturity value. 1-Oct Campus was experiencing a temporary cash flow crunch. The company issued a $40,000 one-year note in settlement of an outstanding account payable. The note bears interest at 8% per annum. The agreement with the creditor was that Campus would repay the note as soon as possible, and the total interest would be
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Unformatted text preview: allocated to each month based on the "rule of 78." 31-Oct Campus paid the note and accrued interest resulting from the October 1 transaction. 1-Nov Borrowed $75,000 cash from a local bank by issuing a 2-year, 6% promissory note. The interest is to be calculated based on actual days, using a 365-day year assumption. 1-Dec Campus paid the note and accrued interest resulting from the June 1 transaction. (a) Prepare journal entries necessary to record the above transactions. (b) Prepare year-end adjusting journal entries pertinent to the above borrowing transactions....
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This note was uploaded on 02/29/2012 for the course ACCOUNTING 101 taught by Professor Hudack during the Spring '11 term at FIU.

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