Reference no: EM131699631
Q1. Keesha Co. borrows $200,000 cash on November 1, 2015, by signing a 90-day, 9% note with a face value of $200,000.
a. Complete the journal entries below to record (a) issuance of the note, (b) accrual of interest at the end of 2015, and (c) payment of the note at maturity.
Make sure your debits and credits are equal.
Q2. Prepare any necessary adjusting entries at December 31, 2015, for Melbourne Company's year-end financial statements for each of the following separate transactions and events. If no entry is required, reply "No entry necessary".
1. Melbourne Company guarantees the $100,000 debt of a supplier. The supplier will probably not default on the debt.
2. A disgruntled employee is suing Melbourne Company. Legal advisers believe that the company will probably need to pay damages, but the amount cannot be reasonably estimated.
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