A business issued a 45-day note for $99,000 to a creditor on account. The note was discounted at 7%.

Journalize the entries to record (a) the issuance of the note on March 1 and (b) the payment of the note at maturity. Assume a 360-day year. Refer to the Chart of Accounts for exact wording of account titles. Round your answers to nearest whole dollar.

Chart of Accounts

CHART OF ACCOUNTSGeneral LedgerASSETS110Cash111Accounts Receivable112Interest Receivable113Notes Receivable115Merchandise Inventory116Supplies118Prepaid Insurance120Land123Building124Accumulated Depreciation-Building125Office Equipment126Accumulated Depreciation-Office Equipment

LIABILITIES210Accounts Payable213Interest Payable214Notes Payable215Salaries Payable216Social Security Tax Payable217Medicare Tax Payable218Employees Federal Income Tax Payable219Employees State Income Tax Payable221Retirement Savings Deductions Payable224Federal Unemployment Tax Payable225State Unemployment Tax Payable226Vacation Pay Payable227Unfunded Pension Liability228Product Warranty Payable229EPA Fines Payable230Litigation Claims Payable

EQUITY310Owner, Capital311Owner, Drawing312Income Summary

REVENUE410Sales610Interest Revenue

EXPENSES510Cost of Merchandise Sold520Salaries Expense524Depreciation Expense-Building525Delivery Expense526Repairs Expense529Selling Expenses531Rent Expense532Depreciation Expense-Office Equipment533Insurance Expense534Supplies Expense535Payroll Tax Expense536Vacation Pay Expense537Pension Expense538Cash Short and Over539Product Warranty Expense540Damage Awards and Fines541Miscellaneous Expense710Interest Expense

Journal

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a. Journalize the entry to record the issuance of the note on March 1. Assume a 360-day year. Refer to the Chart of Accounts for exact wording of account titles. Round your answers to nearest whole dollar.

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PAGE 1

JOURNAL

ACCOUNTING EQUATION

Score:29/37

DATEDESCRIPTIONPOST. REF.DEBITCREDITASSETSLIABILITIESEQUITY1

2

3

Points:

5.49 / 7

b. Journalize the entry to record the payment of the note at maturity. Assume a 360-day year. Refer to the Chart of Accounts for exact wording of account titles.

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PAGE 2

JOURNAL

ACCOUNTING EQUATION

Score:20/25

DATEDESCRIPTIONPOST. REF.DEBITCREDITASSETSLIABILITIESEQUITY1

2

Points:

4 / 5

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Check My Work

a. Why is the company issuing the note? What type of note is being issued (interest-bearing or discounted)? How much will the company owe on the maturity date?

b. Recall what type of note was issued. How much does the company have to pay at maturity?