Continuing Cookie Chronicle 1
Continuing Cookie Chronicle
(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,
2014, 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 2014 (1/2 month),
December 2014, and January 2015.
Instructions
(a) Calculate the interest payable that was accrued and recorded to January
31, 2015. Round to nearest dollar.
(b) Calculate the total interest expense and interest payable from February 1
to August 31, 2015. Prepare the journal entry at August 31, 2015, to bring
the accounting records up to date. Round to nearest dollar.
(c) Natalie repays her grandmother on September 15, 2015—10 months after
her grandmother extended the loan to Cookie Creations. Prepare the
journal entry for the loan repayment.
(a)
$2,000 X 9% X 2.5/12 = $38
Entry required $143 – $38 accrued to January 31 = $105