1.

November 1, 2018
Cash 16,000,000
Notes payable 16,000,000
2. December 31, 2018
Interest expense 320,000 (16M x 2/12 x 12% = 320K)
Interest payable 320,000
3. Interest expense 1,120,000 (16M x 9/12 x 12% - 320K = 1.6M)
Interest payable 320,000
Notes payable 16,000,000
Cash 17,440,000

Feb 1, 2018
Cash $5,000,000
Notes payable $5,000,000
May 1, 2018
Interest expense 125,000 (5M x 3/12 x 10% = 125K)
Notes payable 5,000,000
Cash 5,125,000
Dec 1, 2018
Cash 9,325,000
Discount on notes payable 675,000 (9% x 10,000 x 9/11 = 675,000)
Notes payable 10,000,000
Dec 31, 2018
Interest expense 75,000 (675,000 x 1/9 = 75K)
Discount on notes payable 75,000 (bc the discount paid already beg)
Sept 1
Interest expense 600,000 (675,000 x 8/9 = 600K)
Discount on notes payable 600,000 (bc the discount paid already beg)
Notes payable 10,000,000
Cash 10,000,000

1) From 31/12/2018 to 31/5/2019: less than 1 year + option of calling even as not
expected => Classified as current liability with the amount of $10,000,000
2) Due 31/5/2022 but violation on 31/12/2018 & a waiver until June 2019: less than 1
year => classified as current liability with the amount of $14,000,000
3) Mature on 31/7/2019: less than 1 year => Classified as current liability with the amount
of $7,000,000

* REMEMBER:
Retirement: Paid-in capital—excess of par
Treasury stock: Paid-in capital—share repurchase
Treasury stock is a contra account (decreases Share Capital account)
1. Jan 23, 2018
Treasury stock (10M x $20) 200M
Cash 200M
2. Sept 3, 2018
Cash (1M x $21) 21M
Treasury stock (1M x $20) 20M
Paid-in Capital–Share Repurchase 1M
3. Nov 4, 2018
Cash (1M x $18) 18M
Paid-in Capital–Share Repurchase 1M (1M because in previous entry we
credited (means increase) this account by 1M)
Retained Earnings 1M (this means a reduction of 1M in
retained earnings because we bought back with a lower price)
Treasury stock (1M x $20) 20M

NOTE: If the treasury stock is sold at above its repurchase price, the gain is credited to
an account called "paid-in capital from treasury stock.

Apr 1, 2018
Retained earnings (10% x 3M at $30) (set aside a lot) 9,000,000 (10% x 3M x $30)
Common stock dividends issuable/distributable (pay lower) 300,000 (10% x 3M at $1)
Paid-in capital—excess of par (remainder) (still have) 8,700,000
Jun 1, 2018
Common stock dividends issuable/distributable 300,000
Common stock (like issuing) 300,000
Common stock (5M x 1$) (loss) 5,000,000
Retained earnings (loss) 2,000,000
Paid-in capital—excess of par (loss; plug) 15,000,000
Cash 22,000,000
Income summary 88,000,000
Retained earnings 88,000,000
Retained earnings 33,000,000
Cash 33,000,000
Retained earnings 20,000,000
Common stock (4% x $100M x $1) 4,000,000
Paid-in capital—excess of par 16,000,000