Question

1. The following transaction is for a non-interest bearing note reported by the gross amount.

We receive $8,900 in exchange for payment of $10,000 due one year from today.

Required: Show the original entry and the final payment in one year.

2. The following transaction is for a non-interest bearing note reported by the net amount.

We receive $8,900 in exchange for payment of $10,000 due one year from today.

Required: Show the original entry and the final payment in one year.

Answer 1

The answer has been presented in the supporting sheet. For detailed answer refer to the supporting sheet.

1 Answer 2 Part 1) 3 Sr. No. 4 1 Debit Credit 8900 Particulars Cash Discount on Note Payable Note Payable (To record issue of bond payable) 5 6 1100 10000 7 8 9 1100 10000 10 11 2 Interest expense Note Payable Discount on note payable Cash To reocrd payment of note payable) 1100 10000 12 13 14 15 Part 2) 16 Sr. No. 17 1 Debit Credit 8900 Particulars Cash Note Payable To record issue of bond payable) 18 8900 19 20 21 2 1100 22 8900 Interest expense Note Payable Cash (To reocrd payment of note payable) 23 10000 24 25