The following selected transactions relate to liabilities of Odyssey Travel Corporation. Odyssey’s fiscal year ends on December 31.
Prepare the appropriate journal entries through the maturity of each liability.
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).
Aug. 1 Paid the commercial paper at maturity.