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1）Samson PLC issued a 4-year, £75,000, zero-interest-bearing note to Brown Ltd. on January 1, 2019. The...

1）Samson PLC issued a 4-year, £75,000, zero-interest-bearing note to Brown Ltd. on January 1, 2019. The implicit interest rate is 12%. Prepare Samson’s journal entries for (a) the January issuance and (b) the December 31 recognition of interest.

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Answer #1
Samson Corporation
Journal Enteries
Date Particulars Debit in £ Credit in £
1.1.2019 Cash a/c                             Dr. 47664
Discount on Notes Payable a/c   Dr. 27336
           To Notes Payable 75000
(To record issuance of note)
31.12.2019 Interest Expense a/c                 Dr. 5720
          To Discount on Notes Payable 5720
( To record interest)
(47,664 x .12)
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