Question: The following selected transactions relate to liabilities of Rocky Mountain Adventures. Rocky Mountain's fiscal year ends on December 31.
January 13 Negotiate a revolving credit agreement with First Bank that can be renewed annually upon bank approval. The amount available under the line of credit is $10 million at the bank's prime rate. February 1 Arrange a three-month bank loan of $4 million with First Bank under the line of credit agreement. Interest at the prime rate of 7% is payable at maturity.
May 1 Pay the 7% note at maturity.
Required: Record the appropriate entries, if any, on January 13, February 1, and May 1.