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You are thinking of repaying all amounts outstanding to your parents. Recall that you borrowed $2,500 on November 16, 2020, from your parents. Interest on the note is 6% per year, and the note plus interest was to be repaid in 24 months.
A monthly adjusting journal entry was prepared for the months of November 2020 (1/2 month), December 2020, and January 2021. Question:
Problem 1: Calculate the interest payable that was accrued and recorded to July 31, 2021, assuming monthly adjusting entries were made.
Problem 2: Show the journal entry at August 31, 2021, to record one month's accrued interest.
Problem 3: You repay your parents on September 15, 2021-10 months after they extended the loan to your business. Show the journal entry for the loan repayment.
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