Question

Entries for Discounted Note Payable

A business issued a 90-day note for $48,000 to a creditor on account. The note was discounted at 6%. 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

Sl No	Date	Particulars	Debit (&)	Credit (&)
1		purchases A/c                                                                      Dr.	47,280.00
		To Creditors A/c		47,280.00
		Creditors A/c                                                                   Dr.	47,280.00
		Interest expenses	720.00
		To   Notes Payable		48,000.00
		(Being note payable issued to a creditor)
2		Note payable A/c                                                              Dr.	48,000.00
		To Bank		48,000.00
		(Being note payable paid through bank at maturity)
	Interest calculation
	rate		6%
		48,000*6%*90/360	720