Question - McLaughlin Inc. operates with a June 30 year-end. During 2010, the following transactions occurred:
a. January 1: Signed a one-year, 10% loan for $35,000. Interest and principal are to be paid at maturity.
b. January 10: Signed a line of credit with Little Local Bank to establish a $560,000 line of credit. Interest of 9% will be charged on all borrowed funds.
c. February 1: Issued a $28,000 non-interest-bearing, six-month note to pay for a new machine. Interest on the note, at 12%, was deducted in advance.
d. March 1: Borrowed $210,000 on the line of credit.
e. June 1: Repaid $140,000 on the line of credit plus accrued interest.
f. June 30: Made all necessary adjusting entries.
g. August 1: Repaid the non-interest-bearing note.
h. September 1: Borrowed $280,000 on the line of credit.
i. November 1: Issued a three-month, 8%, $16,800 note in payment of an overdue open account. j. December 31: Repaid the one-year loan [from transaction (a)] plus accrued interest.
Required
1. Identify and analyze the effect of these transactions.
2. As of December 31, which notes are outstanding? How much interest is due on each?