Problem
Julio Ivors operates a proprietorship. Sales have been very good in recent months, resulting in a substantial amount of cash on hand. However, Julio knows that in six months, he will have to purchase more inventory for the next season. He realizes that if he leaves the cash in the bank, he will receive an insignificant amount of interest. He, therefore, decides to loan his excess cash of $20,000 to his brother-in-law, charging interest at an annual rate of 12%. Assume Julio Ivors' proprietorship has a year-end of December 31.
Required:
1- Record the entry when issuing the loan on August 15.
2- Record any required entries related to the loan as of December 31.
3- Record the deposit of the re-payment of the loan with interest on February 15.