South Col is one of the world's most popular outdoor apparel companies. Assume that South Col borrows $2.2 million from Bank of the Midwest and signs a note promising to pay the $2.2 million back in eight months, at which time South Col will also pay any accrued interest. The interest rate on the note is 6%.
1. Prepare the journal entry South Col will record when it signs the note and receives the cash.
2. Prepare the journal entry that South Col will record when it pays off the note and any accrued interest after eight months.