Answer:
A) Prepare the entry to record the receipt of funds from the loan
                                       Dr             Cr
                                       $              $
Cash                                  13,200
Notes Payable                                         13,200
Being the receipt of funds from the ban
B) Prepare the entry to accrue the interest on June 30
                                      Dr             Cr
                                      $              $
Interest Expense (13200 * 0.05 * 1/12) Â Â Â Â Â Â Â 55
Interest Payable                                        55
Being accrued interest as at month end June 30
C) Assuming the adjusting entries are made at the end of each month, determine the balance in the interest payable account as at December 31, 2020
= Monthly accrued interest * number of months = 55 * 7 = $385
D) Prepare the entries required on January 1, 2023 when the loan is paid back:
                                       Dr             Cr
                                       $              $
Notes Payable                          13,200
Interest Payable                           385
Cash                                                  13,585
Being refund of loan
Explanation:
