On May 1, 2017, Meehan Inc. lends $125,000 to Solar Power Inc. The loan will be repaid in 90 days with interest at 12%.
Required
1. Prepare the journal entry on Meehan’s books on May 1, 2017.
2. Assume that Meehan prepares quarterly statements on May 30, 2017. Prepare the adjusting entry on Meehan’s books on May 30, 2017, regarding the loan.
3. Prepare the entry on Meehan’s books on July 29, 2017, when Solar Power repays the principal and interest.
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