High School

We appreciate your visit to Taylor Bank lends Guarantee Company 100 137 on January 1 Guarantee Company signs a 100 137 12 9 month interest bearing note What is the. This page offers clear insights and highlights the essential aspects of the topic. Our goal is to provide a helpful and engaging learning experience. Explore the content and find the answers you need!

Taylor Bank lends Guarantee Company $100,137 on January 1. Guarantee Company signs a $100,137, 12%, 9-month, interest-bearing note.

What is the entry made by Guarantee Company on January 1 to record the proceeds and issuance of the note?

A.
- Notes Payable $100,137
- Interest Payable $4,506
- Cash $100,137
- Interest Expense $4,506

B.
- Interest Expense $9,012
- Cash $91,125
- Notes Payable $100,137

C.
- Cash $109,149
- Interest Expense $9,012
- Notes Payable $100,137

D.
- Cash $100,137
- Notes Payable $100,137

Answer :

The journal entry made by Guarantee Company on January 1 to record the proceeds and issuance of the note would be option b.

When Guarantee Company receives the loan proceeds and issues the interest-bearing note, it needs to record the transaction correctly. The entry should reflect the cash received, the amount of interest expense accrued, and the issuance of the notes payable.

Option b. correctly records the transaction. It debits Interest Expense for the accrued interest amount of $9,012 (calculated as $100,137 x 12% x 9/12) and debits Cash for the amount of cash received, which is $91,125 (calculated as $100,137 - $9,012). It credits Notes Payable for the full amount of the note, which is $100,137.

Options a, c, and d. do not properly account for the accrued interest expense and the net cash received. Option a. does not account for the accrued interest at all. Option c. incorrectly records the cash received as higher than the actual amount. Option d. only records the issuance of the notes payable without considering the accrued interest or cash received.

Therefore, the correct entry is b. Interest Expense 9,012, Cash 91,125, Notes Payable 100,137.

Learn more about journal entry here:

https://brainly.com/question/28390337

#SPJ11

Thanks for taking the time to read Taylor Bank lends Guarantee Company 100 137 on January 1 Guarantee Company signs a 100 137 12 9 month interest bearing note What is the. We hope the insights shared have been valuable and enhanced your understanding of the topic. Don�t hesitate to browse our website for more informative and engaging content!

Rewritten by : Barada