Problemon october 1 2013 king company issued to nations, Ask an Expert

Accounting

Problem:

On October 1, 2013, King Company issued to Nations Bank a $600,000, 8-month, noninterest-bearing note. Interest was discounted by the bank at a 12% discount rate.

Required:

Question 1: Prepare the appropriate journal entry by King to record the issuance of the note.

Question 2: Determine the effective interest rate.

Question 3: Suppose the note had been structured as a 12% note with interest and principal payable at maturity. Prepare the appropriate journal entry to record the issuance of the note by King.

Question 4: Prepare the appropriate journal entry on December 31, 2013, to accrue interest expense on the note described in number 3 for the 2013 financial statements.

Note: Please show how to work it out.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M91164068

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