Blanton Plastics, a household plastic product manufacturer, borrowed $13 million cash on October 1, 2021, to provide wor

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Blanton Plastics A Household Plastic Product Manufacturer Borrowed 13 Million Cash On October 1 2021 To Provide Wor 1 (24.48 KiB) Viewed 17 times

Blanton Plastics, a household plastic product manufacturer, borrowed $13 million cash on October 1, 2021, to provide working capit for year-end production. Blanton issued a four-month, 15% promissory note to L&T Bank under a prearranged short-term line of crea Interest on the note was payable at maturity. Each firm's fiscal period is the calendar year Required: 1. Prepare the journal entries to record (a) the issuance of the note by Blanton Plastics and (b) L&T Bank's receivable on October 1, 2021. 2. Prepare the journal entries by both firms to record all subsequent events related to the note through January 31, 2022 3. Suppose the face amount of the note was adjusted to include interest (a noninterest-bearing note) and 15% is the bank's stated discount rate. (a) Prepare the journal entries to record the issuance of the noninterest-bearing note by Blanton Plastics on October 2021, the adjusting entry at December 31, and payment of the note at maturity. (b) What would be the effective interest rate?