On November 1, 2013, Ziegler Products issued a $200,000,9-month, noninterest-bea
ID: 2478854 • Letter: O
Question
On November 1, 2013, Ziegler Products issued a $200,000,9-month, noninterest-bearing note to the bank. Interest was discounted at a 12% discount rate. Prepare the appropriate journal entry by Ziegler to record the issuance of the note. Prepare the adjusting entry on December 31, 2013. Prepare the appropriate journal entry on August 1, 2013 (maturity). Suppose the note had been structured as a 12% note with interest and principal payable at maturity. Prepare the appropriate journal entry to record the issuance of the note by Ziegler. Prepare the appropriate journal entry on December 31, 2013 to accrue interest expense on the note described in number 4 for the 2013 financial statements.Explanation / Answer
Journal entries
Account titles
Debit
Credit
Cash
182,000
Discount on notes payable
18,000
To notes payable
200,000
Interest expense
4,000
To discount on notes payable
(200,000*12%*2/12)
4,000
Notes payable
200,000
Interest expense
14,000
To discount on notes payable
14,000
To Cash
200,000
Cash
200,000
To Notes payable
200,000
Interest expense
4,000
To interest payable
4,000
Account titles
Debit
Credit
Cash
182,000
Discount on notes payable
18,000
To notes payable
200,000
Interest expense
4,000
To discount on notes payable
(200,000*12%*2/12)
4,000
Notes payable
200,000
Interest expense
14,000
To discount on notes payable
14,000
To Cash
200,000
Cash
200,000
To Notes payable
200,000
Interest expense
4,000
To interest payable
4,000
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