Adjusting entries; solving for unknowns
Response to the following problem:
The Eldorado Corporation's controller prepares adjusting entries only at the end of the fiscal year. The following adjusting entries were prepared on December 31, 2016:
Debit Credit
Interest expense 7,200
Interest payable 7,200
Rent expense 35,000
Prepaid rent 35,000
Interest receivable 500
Interest revenue 500
Additional information:
1. The company borrowed $120,000 on March 31, 2016. Principal and interest are due on March 31, 2017. This note is the company's only interest-bearing debt.
2. Rent for the year on the company's office space is $60,000. The rent is paid in advance.
3. On October 31, 2016, Eldorado lent money to a customer. The customer signed a note with principal and interest at 6% due in one year.
Required:
Determine the following:
1. What is the interest rate on the company's note payable?
2. The 2016 rent payment was made at the beginning of which month?
3. How much did Eldorado lend its customer on October 31?