Question

A business issued a 90-day note for $51,000 to a bank. The note was discounted at 7%. Assume a 360-day year. Question Content Area a. Journalize the entry to record the issuance of the note. If an amount box does not require an entry, leave it blank. If necessary, round to nearest whole dollar

Answer 1

The journal entry to record the issuance of the note is:

Debit: Cash = $51,000 (proceeds received)

Debit: Discount on Note Payable = $787 (computed as $51,000 x 7% x 90/360)

Credit: Notes Payable = $51,787 (face value of the note)

The entry can be summarized as:

Debit: Cash $51,000

Debit: Discount on Note Payable $787

Credit: Notes Payable $51,787