The following selected transactions relate to liabilities of United Insulation Corporation. United's fiscal year ends on December 31.
| 2013 |
|
| Jan.13 |
Negotiated a revolving credit agreement with Parish Bank that can be renewed annually upon bank approval. The amount available under the line of credit is $27.5 million at the bank's prime rate.
|
| Feb.1 |
Arranged a three-month bank loan of $5.2 million with Parish Bank under the line of credit agreement. Interest at the prime rate of 7% was payable at maturity.
|
| May 1 |
Paid the 7% note at maturity. |
| Dec.1 |
Supported by the credit line, issued $17.3 million of commercial paper on a nine-month note. Interest was discounted at issuance at a 6% discount rate.
|
| 31 |
Recorded any necessary adjusting entry(s). |
| 2014 |
|
| Sept.1 |
Paid the commercial paper at maturity. |
| Required: |
|
Calculate the total interest payable through maturity also calculate the interest payable for the year ended December 31, 2013 and December 31, 2014. (Enter your answers in whole dollars.)
| 3- month note |
Principal |
x |
Rate |
|
x |
Time |
= |
Interest |
| total through maturity |
|
x |
|
% |
x |
3/12 |
= |
|
| 9 - Month commercial paper |
Principal |
x |
Rate |
|
x |
Time |
= |
Interest |
| Total through maturity |
|
x |
|
% |
x |
9/12 |
= |
|
| 2013 Interest |
|
x |
|
% |
x |
1/12 |
= |
|
| 2014 Interest |
|
x |
|
% |
x |
8/12 |
= |
|
|
Prepare the appropriate journal entries through the maturity of each liability. (If no entry is required for a particular transaction, select "No journal entry required" in the first account field. Enter your answers in whole dollars.)
| Date |
General Journal |
Debit |
Credit |
| Jan 13, 2013 |
No journal entry required |
|
|
| Feb 01, 2013 |
Cash |
|
|
|
Notes payable |
|
|
| May 01, 2013 |
Notes Payable |
|
|
|
Interest expense |
|
|
|
Cash |
|
|
| Dec 01, 2013 |
Cash |
|
|
|
Discount on notes payable |
|
|
|
Notes payable |
|
|
| Dec 31, 2013 |
Interest expense |
|
|
|
Discount on notes payable |
|
|
|
Prepare the appropriate journal entries through the maturity of each liability 2014. (If no entry is required for a particular transaction, select "No journal entry required" in the first account field. Enter your answers in whole dollars.)
| Date |
General Journal |
Debit |
Credit |
| Sep 01, 2014 |
Interest expense |
|
|
|
Discount on notes payable |
|
|
| Sep 01, 2014 |
Notes payable |
|
|
|
Cash |
|
|
|
|
|