Question
Bonita Industries signed a three-month, zero-interest-bearing note on November 1, 2020 for the purchase of $504000 of inventory. The face value of the note was
Bonita Industries signed a three-month, zero-interest-bearing note on November 1, 2020 for the purchase of $504000 of inventory. The face value of the note was $516000. Bonita used a Discount of Note Payable account to initially record the note. Assuming that the discount will be amortized equally over the 3-month period and that there was no adjusting entry made for November, the adjusting entry made at December 31, 2020 will include a
debit to Discount on Note Payable for $4000.
credit to Discount on Note Payable for $4000.
debit to Interest Expense for $8000.
credit to Interest Expense for $8000.
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