Ellison Co. issued a $50,000 face value discount note to National Bank on July 1, 2013. The

Question:

Ellison Co. issued a $50,000 discount note to National Bank on July 1, 2013. The note had a 10 percent and a one-year term to maturity.

Required
Prepare general journal entries for the following:
a. The issuance of the note on July 1, 2013.
b. The adjustment for accrued interest at the end of the year, December 31, 2013.
c. Recording interest expense for 2014 and repaying the principal on June 30, 2014.

Discount Rate
Depending upon the context, the discount rate has two different definitions and usages. First, the discount rate refers to the interest rate charged to the commercial banks and other financial institutions for the loans they take from the Federal... Face Value
Face value is a financial term used to describe the nominal or dollar value of a security, as stated by its issuer. For stocks, the face value is the original cost of the stock, as listed on the certificate. For bonds, it is the amount paid to the...