Question

Entries for Discounted Note Payable A business issued a 90-day note for $42,000 to a creditor on account. The note was discounted at 8%. Assume a 360-day year. a. Journalize the entry to record the issuance of the note. For a compound transaction, if an amount box does not require an entry, leave it blank. If necessary, round to one decimal place. a. b. Journalize the entry to record the payment of the note at maturity. b

Answer 1

No.	Accoubts titles and explanation	Debit	Credit
a.	Accounts payable	$41,160
	Interest expense ($42,000 * 8% * 90/360)	$840
	... Notes payable		$42,000
	(To record the issuance of the note)
b.	Notes payable	$42,000
	... Cash		$42,000
	(To record the payment of the note)