Write journal entry to show the effects of signing note

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Calculation of discount rate of the lender and passing journal entries.

Notes payable - discount basis. On August 1, 2009, Colombo Co's treasurer signed a note promising to pay $240,000 on December, 2009. The proceeds of the note were $232,000.

Calculate the discount rate used by the lender? Answer is 3.45% APR.

Write the journal entry to show the effects of (a) signing the note and the receipt of the cash proceeds on Aug 1, 2009. (b) Recording the interest expense for the month of September. (c) Repaying the note on December 31, 2009.

Reference no: EM1312946

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