Give the general journal entry to record each of the following transactions:

1. On June 3, 2016, Wallace Company issued a 120-day, 9 percent note for $17,500 to purchase new office equipment.

2. Wallace Company paid the June 3 note when it became due.

3. On September 18, 2016, Wallace Company borrowed money from the South Park National Bank by discounting its own 90-day noninterest-bearing $30,000 note payable at a discount rate of 10 percent.

4. Wallace Company paid the September 18 note when it became due.

Analyze:

If Wallace had borrowed $30,000 from the bank on September 18, signing a 90-day note, bearing interest of 10 percent, would these be more favorable or less favorable terms for Wallace than discounting the $30,000 note at 10 percent? Why?