Accounting Journal Entry Question for a Notes Payable?

Question

Hello. Can somebody (preferably an accountant or someone who really knows accounting and is 100% sure of their answer ) tell me what the Journal Entry would be for this: "Discounted at 12% a 60-day non-interest-bearing note, $5000; proceeds, $4900; interest, $100. NP7." I need what journal it has to go in and the Debit(s) and Credit(s). This is for an accounting class. I'm having trouble with this one.

Thank you very much!!

Answer

By,
    Payable A/C - $5,000 - Dr.
To,
    Interst A/C - $100 - Cr.
    Cash A/C or Bank A/C - $ 4,900 - Cr.

(Being amount Received $4,900 after deducting $100, with discounted at 12% a 60 day non interest bearing note)

Accounting Journal Entry Question for a Notes Payable?

Answers (1)