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Search the web.. eumann University Oni y » Ch.13 homework C | ezto.mheducation.com/hm.tpx On October 1, Eder Fabrication borrowed $73 million and issued a nine-month promissory note. Interest was discounted at issuance at a 7% discount rate. Prepare the journal entry for the issuance of the note and the appropriate adjusting entry for the note at December 31, the end of the reporting period. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in whole dollars.) View transaction list Journal entry worksheet 2 Record the issuance of the note. Note: Enter debits before credits Event General Journal Debit Credit Record entry Clear entry View general journal 0 Type here to search

Explanation / Answer

Issuance Of Note

Bank A/c Dr  69,357,300

Discount on Notes Dr 3,642,700

To Discounted Notes A/c 73,000,000

(Being Discounted Notes issued payable after nine months)

Adjusting Entry

Interest A/c Dr 1,214,233

To Discount on Notes A/c  1,214,233

(Being adjusting entry made for Interest expense accrued but not due)

Notes:

Issue Price of Notes 73,000,000 x 95.01% = 69,357,300

Discount 73,000,000 x 4.99% = 3,642,700

Interest take for adjusting purpose = 3,642,700 x 3/9

= 1,214,233

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