Question

Entries for Discounted Note Payable

A business issued a 90-day note for $39,000 to a creditor on account. The note was discounted at 9%. 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.	Accounts Payable
	Interest Expense
	Notes Payable

b. Journalize the entry to record the payment of the note at maturity.

b.	Notes Payable
	Cash

Answer 1

	Journal entries
No.	GENERAL JOURNAL	DEBIT ($)	CREDIT ($)
a	Accounts Payable	39,000.00
	Notes Payable		39,000.00
	(To record the issuance of the note)
b	Notes Payable	39,000.00
	Interest Expense (39,000 x 9% x 90/360)	877.5
	Cash		39,877.5
	(To record the payment of the note at maturity)