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What is the loss on discounting on a note in numbers

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Reference no: EM132791674

The notes receivable of CPA consisted of the following:

1. 60-day note of 10,000 dated May 15 with a 9% interest rate, discounted at the bank on June 8 at 12%.

2. 2-year note of 100,000 (face amount) dated October 1 with no stated interest rate and a market rate of 9% interest, discounted at the bank on November 30 at 12%. This note was received from the sale of equipment.

Required:

Problem I. Prepare the entries for the discounting

Problem II. What is the loss on discounting on a note in numbers 1 and 2, respectively?

Problem III. What are the net proceeds on note discounting in numbers 1 and 2 respectively?

 

Reference no: EM132791674

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