Paid the commercial paper at maturity

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The following selected transactions relate to liabilities of United Insulation Corporation. United's fiscal year ends on December 31.

Required:

Prepare the appropriate journal entries through the maturity of each liability.

2011 Jan. 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 $20 million at the bank's prime rate.

Feb. 1 Arranged a three-month bank loan of $5 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.

Dec. 1 Supported by the credit line, issued $10 million of commercial paper on a nine-month note. Interest was discounted at issuance at a 9% discount rate.31 Recorded any necessary adjusting entry(s).

2012 Sept. 1 Paid the commercial paper at maturity.


Reference no: EM13995119

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