Kehoe Company recently experienced a temporary delay in cash collections and needed to borrow
$106,000 on November 1 of the current year to pay trade accounts payable. The 6-month, 6% note and
interest are due on May 1 of the following year. Kehoe has a December 31 fiscal year-end. What are the
required journal entries to record the issuance of the note, accrued interest, and the payment of principal
and interest at maturity?
Begin by preparing journal entry to record the issuance of the note. (Record debits first, then credits.
Exclude explanations from any journal entries.)
Account
Cash
Long-Term Note Payable
November 1
Next, record the accrued interest payable.
Account
Interest Expense
Interest Payable
December 31
Finally, record the payment of principal and interest at maturity.
Account
Interest Expense
Interest Payable
Long-Term Note Payable
Cash
May 1