Shamrock Corporation issued a 4-year, $74,000, zero-interest-bearing note to Bro
ID: 2596343 • Letter: S
Question
Shamrock Corporation issued a 4-year, $74,000, zero-interest-bearing note to Brown Company on January 1, 2017, and received cash of $42,310. The implicit interest rate is 15%.
Prepare Shamrock’s journal entries for (a) the January 1 issuance and (b) the December 31 recognition of interest. (Round answers to 0 decimal places, e.g. 38,548. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)
No.
Date
Account Titles and Explanation
Debit
Credit
January 1, 2017
December 31, 2017
No.
Date
Account Titles and Explanation
Debit
Credit
(a)January 1, 2017
(b)December 31, 2017
Explanation / Answer
The following are the required journal entries:
No Date Account titles and explanation Debit Creidt a January 1,2017 cash a/c` $42,310 Discount on Notes payable a/c $31,690 ...........To Notes payable a/c $74,000 (discount on notes payble = notes payable - cash =>$74,000 - 42,310 =>$31,690) b December 31, 2017 Interest expense a/c $6,346.50 ............To Discount on notes payable a/c $6,346.50 (interest amount = $42,310 *15%=>$6,346.50)Related Questions
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