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Kohl Company lent $49,587 to Hemingway, Inc, accepting Hemingway's 2-year, $60,000, zero-interest-bearing note. The implied interest...

Kohl Company lent $49,587 to Hemingway, Inc, accepting Hemingway's 2-year, $60,000, zero-interest-bearing note. The implied interest rate is 10%. Prepare Kohl's journal entries for the initial transaction, recognition of interest each year, and the collection of $60,000 at maturity.

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Answer #1
Notes Receivable 60000
     Discount on Notes Receivable 10413
      Cash 49587
Discount on Notes Receivable 4959
      Interest Revenue 4959
Discount on Notes Receivable 5454 (49587+4959)*10%
      Interest Revenue 5454
Cash 60000
       Notes Receivable 60000
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