Recording a Note Payable Wygant Corporation borrowed $290,000 on October 1, 2014. The note carried a 10 percent interest rate with the principal and interest payable on May 1, 2015. Prepare the journal entry to record the note on October 1. Prepare the adjusting entry to record accrued interest on December 31.

Please see explanation column for answer

Explanation:

A) To record the issuance of note

Date               Account title                 Debit                  Credit

Oct 1 2014         Cash                       $290,000

                   Notes Payable                                        $290,000

B) To record the accrued interest for 3 months

Date               Account title                         Debit                  Credit

Dec 31 2014         Interest expense                $7,250      

                   Interest Payable                                                  $7,250

Calculation:

Interest expense :   Principal x rate x period (time)

                               $290,000 x 10%x 3/12 ( from oct - dec)

=$7,250

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