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Prepare the journal entry to record payment

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Question - Many businesses borrow money during periods of increased business activity to finance inventory and accounts receivable. Grabber Inc. is a retailer. Each Christmas season, Grabber builds up its inventory to meet the needs of Christmas shoppers. A large portion of these Christmas sales are on credit. As a result, Grabber often collects cash from the sales several months after Christmas. Assume that on September 1, 2019, Grabber borrowed $4.2 million from Multinational Bank for working capital purposes and signed an interest-bearing note due in six months. The interest rate was 6 percent per annum payable at maturity. The accounting period ends December 31.

Required - Prepare the journal entry to record payment of the note and interest on the maturity date, February 28, 2020.

Reference no: EM132482118

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