Reference no: EM132809081

Jesse Company adjusts its accounts monthly and closes its accounts on December 31. On October 31, year 1, Jesse Company signed a note payable and borrowed $140,000 from a bank for a period of six months at an annual interest rate of 6 percent.

Problem 1: How much is the total interest expense over the life of the note? How much is the monthly interest expense? (Assume equal amounts of interest expense each month.)

Problem 2: In the company's annual balance sheet at December 31, year 1, what is the amount of the liability to the bank?

Problem 3: Prepare the journal entry to record issuance of the note payable on October 31, year 1 and the adjusting entry to accrue interest on the note at December 31, year 1.

Problem 4: Assume the company prepared a balance sheet at March 31, year 2. State the amount of the liability to the bank at this date.