Question: Journalizing Transactions Involving Notes Payable Assume that on November 1, 2009, Tops Bakery negotiated an agreement to borrow $200,000 cash on a one-year note. The note specified that Tops would pay 6 percent interest one year later, on October 31, 2010. The principal was also to be repaid on the maturity date (October 31, 2010).
Required: 1. Depict these events on a timeline similar to the one.
2. How many months of interest are included in the payment on October 31, 2010? How many of these months relate to 2009 versus 2010?
3. Give the journal entry to record the note on November 1, 2009.
4. Give any adjusting entry required on December 31, 2009.
5. Give the journal entry to record payment of the note and interest on the maturity date, October 31, 2010, assuming that interest has not been recorded since December 31, 2009.