The following selected transactions relate to liabilities of Odyssey Travel Corporation. Odyssey’s fiscal year ends on December 31.
Required:
Prepare the appropriate journal entries through the maturity of each liability.
2009
Jan. 22 Negotiated a revolving credit agreement with Massey Bank which can be renewed annually upon bank approval. The amount available under the line of credit is $16 million at the bank’s prime rate.
Mar. 1 Arranged a 3-month bank loan of $7 million with Massey Bank under the line of credit agreement. Interest at the prime rate of 10% was payable at maturity.
June 1 Paid the 10% note at maturity.
Nov. 1 Supported by the credit line, issued $6 million of commercial paper on a nine-month note. Interest was discounted at issuance at a 8% discount rate.
Dec. 31 Recorded any necessary adjusting entry(s).
2010
Aug. 1 Paid the commercial paper at maturity.