Aerospace Engineering borrows $40 million cash on November 1, 2018.

Aerospace signs a six-month, 6% promissory note to First National Bank under a

prearranged short-term line of credit. Interest on the note is payable at maturity.
Each firm has a December 31 year end. 1. Prepare the journal entries on
November 1, 2018 to record (a) the notes payable for Aerospace Engineering and
(b) the notes receivable for First National Bank. 2. Record the adjusting entries
on December 31, 2018 for (a) Aerospace Engineering and (b) First National Bank.
3. Prepare the journal entries on April 30, 2019 to record payment of (a) the
notes payable for Aerospace Engineering and (b) the notes receivable for First
National Bank.
Answer 1-a-for Aerospace Engineering

Date
Nov-01

Answer 1-b-for First National Bank

Date
Nov-01

Answer 2-a-for Aerospace Engineering

Date
Dec-31

Answer 2-b-for First National Bank

Date
Dec-31

Answer 3-a-for Aerospace Engineering

Date
Apr-30

Answer 3-b-for First National Bank

Date
Apr-30
Answer 1-a-for Aerospace Engineering
$ in millions
Accounts Title Debit Credit
Cash $ 40.00
Short term Notes Payable $ 40.00

Answer 1-b-for First National Bank

$ in millions
Accounts Title Debit Credit
Short term Notes Receivable $ 40.00
Cash $ 40.00

Answer 2-a-for Aerospace Engineering

$ in millions
Accounts Title Debit Credit
Interest expense $ 0.40
Interest payable $ 0.40
(6 % of $ 40 million for 2 months)

Answer 2-b-for First National Bank

$ in millions
Accounts Title Debit Credit
Interest Receivable $ 0.40
Interest Revenue $ 0.40

Answer 3-a-for Aerospace Engineering

$ in millions
Accounts Title Debit Credit
Short term Notes Payable $ 40.00
Interest payable $ 0.40
Interest expense $ 0.80
Cash $ 41.20
(6 % of $ 40 million for 4 months)

Answer 3-b-for First National Bank

$ in millions
Accounts Title Debit Credit
Cash $ 41.20
Short term Notes Receivable $ 40.00
Interest Receivable $ 0.40
Interest Revenue $ 0.80
2.4