On May 15, Gotts Outback Clothiers borrowed some money on a 4-month note to provide cash during the slow season of the year. The interest rate on the note was 8%. At the time the note was due, the amount of interest owed was $400.

Instructions

(a) Determine the amount borrowed by Gotts.

(b) Assume the amount borrowed was $18,500. What was the interest rate if the amount of interest owed was $555?

(c) Prepare the entry for the initial borrowing and the repayment for the facts in part (a).

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