Question

On January 1 of the current year, Paisley Company issues a 4-year, non-interest-bearing note with a face value of $7,000 and receives $4,852 in exchange. The recording of the issuance of the note includes a

Answer 1

Answer and Explanation:

The journal entry is shown below:

Cash Dr $4,852

Discount on note payable $2,148

To Note payable $7,000

(Being the issuance of the note is recorded)

Here we debited the cash and discount on note payable as it increased the assets and discount are always debited and credited the note payable as it also increased the liabilities so that the proper posting could be done