The following selected transactions relate to liabilities of United Insulation Corporation. United’s fiscal year ends on December 31. 2024 January 13 Negotiated a revolving credit agreement with Parish Bank that can be renewed annually upon bank approval. The amount available under the line of credit is $34.0 million at the bank’s prime rate. February 1 Arranged a three-month bank loan of $10.0 million with Parish Bank under the line of credit agreement. Interest at the prime rate of 10% was payable at maturity. May 1 Paid the 10% note at maturity. December 1 Supported by the credit line, issued $19.0 million of commercial paper on a nine-month note. Interest was discounted at issuance at a 9% discount rate. December 31 Recorded any necessary adjusting entry(s). 2025 September 1 Paid the commercial paper at maturity. 1. Record the payment of the 10% note at maturity. 2. Record the issuance of $19.0 million of commercial paper on a nine-month note, supported by the credit line. Interest was discounted at issuance at a 9% discount rate. 3. Record necessary adjusting entry to accrue interest on December 31. 4. Record interest on commercial paper in 2025. 5. Record the repayment of commercial paper at maturity.
The following selected transactions relate to liabilities of United Insulation Corporation. United’s fiscal year ends on December 31. 2024 January 13 Negotiated a revolving credit agreement with Parish Bank that can be renewed annually upon bank approval. The amount available under the line of credit is $34.0 million at the bank’s prime rate. February 1 Arranged a three-month bank loan of $10.0 million with Parish Bank under the line of credit agreement. Interest at the prime rate of 10% was payable at maturity. May 1 Paid the 10% note at maturity. December 1 Supported by the credit line, issued $19.0 million of commercial paper on a nine-month note. Interest was discounted at issuance at a 9% discount rate. December 31 Recorded any necessary adjusting entry(s). 2025 September 1 Paid the commercial paper at maturity. 1. Record the payment of the 10% note at maturity. 2. Record the issuance of $19.0 million of commercial paper on a nine-month note, supported by the credit line. Interest was discounted at issuance at a 9% discount rate. 3. Record necessary adjusting entry to accrue interest on December 31. 4. Record interest on commercial paper in 2025. 5. Record the repayment of commercial paper at maturity.
Chapter12: Current Liabilities
Section: Chapter Questions
Problem 12MC: Which of the following accounts are used when a short-term note payable with 5% interest is honored...
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Question
The following selected transactions relate to liabilities of United Insulation Corporation. United’s fiscal year ends on December 31.
2024
| January 13 | Negotiated a revolving credit agreement with Parish Bank that can be renewed annually upon bank approval. The amount available under the line of credit is $34.0 million at the bank’s prime rate. |
|---|---|
| February 1 | Arranged a three-month bank loan of $10.0 million with Parish Bank under the line of credit agreement. Interest at the prime rate of 10% was payable at maturity. |
| May 1 | Paid the 10% note at maturity. |
| December 1 | Supported by the credit line, issued $19.0 million of commercial paper on a nine-month note. Interest was discounted at issuance at a 9% discount rate. |
| December 31 | Recorded any necessary |
2025
| September 1 | Paid the commercial paper at maturity. |
|---|
1. Record the payment of the 10% note at maturity.
2. Record the issuance of $19.0 million of commercial paper on a nine-month note, supported by the credit line. Interest was discounted at issuance at a 9% discount rate.
3. Record necessary adjusting entry to accrue interest on December 31.
4. Record interest on commercial paper in 2025.
5. Record the repayment of commercial paper at maturity.
Transcribed Image Text:1
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January 13, 2024 | No journal entry required
February 01, 2024 Cash
May 01, 2024
Notes payable
Interest expense
Notes payable
Cash
December 01, 202 Cash
Discount on notes payable
Notes payable
December 31, 202 Interest expense
Discount on notes payable
September 01, 202 Interest expense
Discount on notes payable
September 01, 202 Notes payable
Cash
10,000,000
1,000,000 X
10,000,000
0x
5 x
5
5
10,000,000
10,000,000
19,000,000
5 X
5
LO
5
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