course hero- 2 - 1. September 30, company discounted at 10%...

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1. September 30, company discounted at 10% its $240,000, one year zero interest bearing note at First State Bank. a) Prepare journal entries necessary to record the transactions above using appropriate dates (1) In a discounted note, interest is deducted upfront and the proceeds are principal less the interest amount. The interest amount is 240,000X10% =24,000 and the proceeds are 240,000-24,000=216,000. The entry is Sep 30 Cash Dr . .......................................................................................... 216,000 Discount on Notes Payable Cr. ................................................................ 24,000 Notes Payable Cr. ................................................................................... 240,000 b) Prepare adjusting entries necessary at December 31, 2004 in order to properly report interest expense related to the above transactions assuming using straight-line amortization of discounts. On the 9% note payable for equipment, the interest for seven months is
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This note was uploaded on 04/23/2010 for the course BUS 165B 165B taught by Professor Barrymishra during the Spring '10 term at UC Riverside.

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