On July 1, 2017, Morningside Co. borrowed $33,000 from the bank. Morningside signed a ten-month, 6% promissory note for the entire amount. Morningside uses a calendar year-end.

Required
1. Analyze the impact on the accounting equation of the journal entry on July 1, 2017, to record the issuance of the promissory note.
2. Analyze the impact of adjusting entries needed at year-end.
3. Analyze the impact of the journal entry on May 1, 2018, to record the payment of principal and interest.

Question

On July 1, 2017, Morningside Co. borrowed $33,000 from the bank. Morningside signed a ten-month, 6% promissory note for the entire amount. Morningside uses a calendar year-end.

Required
1. Analyze the impact on the accounting equation of the journal entry on July 1, 2017, to record the issuance of the promissory note.
2. Analyze the impact of adjusting entries needed at year-end.
3. Analyze the impact of the journal entry on May 1, 2018, to record the payment of principal and interest.

Quizplus · Accepted Answer

The Answer of On July 1, 2017, Morningside Co. borrowed $33,000 from the bank. Morningside signed a ten-month, 6% promissory note for the entire amount. Morningside uses a calendar year-end.

Required
1. Analyze the impact on the accounting equation of the journal entry on July 1, 2017, to record the issuance of the promissory note.
2. Analyze the impact of adjusting entries needed at year-end.
3. Analyze the impact of the journal entry on May 1, 2018, to record the payment of principal and interest.