Final Exam Need ASAP On August 31, Latty Co. partially refunded $457,000 of its

Question

Final Exam Need ASAP

On August 31, Latty Co. partially refunded $457,000 of its outstanding 10% note payable made one year ago to Dugan State Bank by paying $457,000 plus $45,700 interest, having obtained the $502,700 by using $127,780 cash and signing a new one-year $412,000 note discounted at 9% by the bank.

Account Titles and Explanation

Debit

Credit

Final Exam Need ASAP

On August 31, Latty Co. partially refunded $457,000 of its outstanding 10% note payable made one year ago to Dugan State Bank by paying $457,000 plus $45,700 interest, having obtained the $502,700 by using $127,780 cash and signing a new one-year $412,000 note discounted at 9% by the bank.

Explanation / Answer

Journal Entry

August 31 10% Notes Payable debit $ 457000

Interest Expense debit $ 45700

Discount on notes payable ( 412000 *9%) debit $ 37080

9% Notes Payable credit $ 412000

Cash credit $ 127780

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