On November 1, 2007 Edwin, Inc., borrowed cash and signed a $60,000, one year note payable. Required

Question:

On November 1, 2007 Edwin, Inc., borrowed cash and signed a $60,000, one year note payable.

Required
1. Compute the following items assuming
(i) An interest-bearing note at 12%,
(ii) A non-interest-bearing note discounted at 12%:
a. Cash received
b. Effective interest rate
c. Interest expense for 2007
2. Prepare the journal entries for Edwin, Inc. under each case for 2007 and 2008.