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7 October, 08:11

Kingbird Music School borrowed $24,000 from the bank signing a 6%, 6-month note on November 1. Principal and interest are payable to the bank on May 1. If the company prepares monthly financial statements, what adjusting entry should the company make at November 30 with regard to the note (round answer to the nearest dollar) ?

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  1. 7 October, 10:50
    0
    Given that,

    Amount borrowed from bank = $24,000

    Interest rate = 6%

    Time period = 6 months

    Interest for the month of November:

    = $24,000 * 6% * (1 : 12)

    = $120

    Therefore, the journal entry is as follows:

    Interest expense A/c Dr. $120

    To interest payable $120

    (To record the interest expense)
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