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Blanton Plastics, a household plastic product manufacturer, borrowed $28 million cash on
October 1, 2013, to provide working capital for year-end production. Blanton issued a four-
month, 12% promissory note to L&T Bank under a prearranged short-term line of credit. Interest
on the note was payable at maturity. Each firm
Blanton Plastics, a household plastic product manufacturer, borrowed $28 million cash on
October 1, 2013, to provide working capital for year-end production. Blanton issued a four-
month, 12% promissory note to L&T Bank under a prearranged short-term line of credit. Interest
on the note was payable at maturity. Each firm
Solution
Present vale of the bond 28,000,000.00 Amount of Total interest 28000000*12%*4/12 =
1,120,000.00 Future value of the bond = 29,120,000.00 Journal Entries 01-Oct-13 Cash
28,000,000.00 Bonds Payable 28,000,000.00 31-Dec-13 Interest Expense 840,000.00
Bonds Payable 840,000.00 31-Jan-14 Bonds Payble 28,840,000.00 Interets Expense
280,000.00 Cash 29,120,000.00

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Blanton Plastics- a household plastic product manufacturer- borrowed $.docx

  • 1. Blanton Plastics, a household plastic product manufacturer, borrowed $28 million cash on October 1, 2013, to provide working capital for year-end production. Blanton issued a four- month, 12% promissory note to L&T Bank under a prearranged short-term line of credit. Interest on the note was payable at maturity. Each firm Blanton Plastics, a household plastic product manufacturer, borrowed $28 million cash on October 1, 2013, to provide working capital for year-end production. Blanton issued a four- month, 12% promissory note to L&T Bank under a prearranged short-term line of credit. Interest on the note was payable at maturity. Each firm Solution Present vale of the bond 28,000,000.00 Amount of Total interest 28000000*12%*4/12 = 1,120,000.00 Future value of the bond = 29,120,000.00 Journal Entries 01-Oct-13 Cash 28,000,000.00 Bonds Payable 28,000,000.00 31-Dec-13 Interest Expense 840,000.00 Bonds Payable 840,000.00 31-Jan-14 Bonds Payble 28,840,000.00 Interets Expense 280,000.00 Cash 29,120,000.00