Question

Entries for Discounted Note Payable

A business issued a 45-day note for $80,000 to a creditor on account. The note was discounted at 5%. 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.

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

	General Journal	Debit	Credit
a.	Accounts Payable	$79,500
	Interest Expense($80,000 * 5% * 45/360)	$500
	Notes Payable		$80,000
b.	Notes Payable	$80,000
	Cash		$80,000