Answer:
The Journal entries are as follows:
(i) Account payable A/c Dr. $99,000
To notes payable $99,000
(To record issue note payable)
(ii) Notes payable A/c Dr. $99,000
Interest Expense A/c Dr. $866
To cash A/c $99,866
(To record payment of note at maturity)
Working Notes:
Interest Expense = $99,000 × 7% × (45 ÷ 360)
= $99,000 × 7% × 0.125
= $866