On November 1, 2019, Edwin Inc. borrowed cash and signed a $60,000, 1-year note payable.

Required:

1.

Compute the following items assuming (a) an interest-bearing note at 12%, (b) a non-interest-bearing note discounted at 12%:

	a. cash received
	b. effective interest rate
	c. interest expense for 2019

2.

Prepare the journal entries for Edwin under each case for 2019 and 2020.

3.

Next Level Why is the effective rate higher for the non-interest-bearing note?

General Journal

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2a. Assuming an interest-bearing note at 12%, prepare the necessary journal entries to record:

	1. The note payable on November 1, 2019
	2. The year-end adjustment related to the note
	3. The payment of the note, including both principal and interest, on October 31, 2020

General Journal Instructions

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PAGE 1

GENERAL JOURNAL

Score: 73/113

	DATE	ACCOUNT TITLE	POST. REF.	DEBIT	CREDIT
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Points:

14.21 / 22

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2b. Assuming a non-interest-bearing note at 12%, prepare the necessary journal entries to record:

	1. The note payable on November 1, 2019
	2. The year-end adjustment related to the note
	3. The interest expense on October 31, 2020
	4. The payment of the note on October 31, 2020

General Journal Instructions

How does grading work?

PAGE 1

GENERAL JOURNAL

Score: 73/113

	DATE	ACCOUNT TITLE	POST. REF.	DEBIT	CREDIT
1
2
3
4
5
6
7
8
9