On October 1, 2017, Ratkowski Inc. borrowed $18,000 from Second National Bank by issuing a 12-month note.

Question:

On October 1, 2017, Ratkowski Inc. borrowed $18,000 from Second National Bank by issuing a 12-month note. The bank discounted the note at 9%.

Required

1. Identify and analyze the effect of the issuance of the note.

2. Identify and analyze the effect of the accrual of interest on December 31, 2017.

3. Identify and analyze the effect of the payment of the note on October 1, 2018.

4. What effective rate of interest did Ratkowski pay?

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Using Financial Accounting Information The Alternative to Debits and Credits

ISBN: 978-1337491471

10th edition

Authors: Gary A. Porter, Curtis L. Norton

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Question Posted: Jun 20, 2017 08:43 AM

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On October 1, 2017, Ratkowski Inc. borrowed $18,000 from Second National Bank by issuing a 12-month note.

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Using Financial Accounting Information The Alternative to Debits and Credits

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