Question

Marigold Corporation borrowed $56,600 on November 1, 2017, by signing a $58,040, 3-month, zero-interest-bearing note. Prepare Marigold’s November 1, 2017, entry; the December 31, 2017, annual adjusting entry; and the February 1, 2018, entry.

Answer 1

Date	Account title	Debit	Credit
Nov-01	Cash	$ 56,600
	Discount on note payable	$    1,440
	Note payable		$ 58,040
Dec-31	Interest expense ($1,440/3*2)	$        960
	Discount on note payable		$        960
Feb-01	Interest expense ($1,440/3*1)	$        480
	Discount on note payable		$        960
	Note payable	$ 58,040
	Cash		$ 58,040

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