Acc280 Financial Accounting: Continuing Cookie Chronicle 10 (CCC10)

Acc280 Financial Accounting

Continuing Cookie Chronicle 10 (CCC10)

Note: This is a continuation of the Cookie Chronicle from Chapters 1 through 9.)

CCC10 Natalie is thinking of repaying all amounts outstanding to her grandmother. Recall that Cookie Creations borrowed $2,000 on November 16, 2009, from Natalie’s grandmother. Interest on the note is 9% per year, and the note plus interest was to be repaid in 24 months. Recall that a monthly adjusting journal entry was prepared for the months of November 2009 (1/2 month), December 2009, and January 2010.

Instructions

(a) Calculate the interest payable that was accrued and recorded to January 31, 2010. Round to nearest dollar.

(b) Calculate the total interest expense and interest payable from February 1 to August 31, 2010. Prepare the journal entry at August 31, 2010, to bring the accounting records up to date. Round to nearest dollar.

(c) Natalie repays her grandmother on September 15, 2010—10 months after her grandmother extended the loan to Cookie Creations. Prepare the journal entry for the loan repayment.
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