Question

Jamestown Industries issued a $10,000, 90-day, noninterest-bearing note payable to the bank on December 1, 2016. At the date of discount, the bank's discount rate was 18 percent.
The company would prepare which of the following journal entries on December 31, 2018:

a) Interest Expense      150
          Interest Payable        150

b)Interest Expense                          150
          Discount on Notes Payable    150

c)Interest Payable     150
         Note Payable              150

d)Interest Expense      150
         Cash                                   150

Answer 1

Interest expense for 30 days = 10000*18%*30/360= $150
The Journal entry on December 31, 2018 is:
Interest Expense	150
Discount on Notes Payable		150
Option B is correct