Purpose: (L.O. 2) This exercise will review the journal entries involved for an interest-bearing note payable.
On November 1, 2014, Bono Company borrowed $80,000 from National Bank and signed a note stipulating that $80,000 was to be repaid in 6 months with interest at 12%. Bono Company adjusts its accounts and prepares financial statements annually on December 31. (Reversing entries discussed in the Appendix to Chapter 4 are not used.)