On November 16, 2019, Clear Glass Company borrowed $22,000 from First American Bank by issuing a 90-day, non-interest-bearing note. The bank discounted this note at 10% and remitted the difference to Clear Glass.

Required:

1.	Prepare the journal entries of Clear Glass to record the preceding information, the related calendar year-end adjusting entry, and payment of the note at maturity.
2.	Show how the preceding items would be reported on the December 31, 2019, balance sheet.
3.	Next Level What is Clear Glass Companys effective interest rate?

CHART OF ACCOUNTSClear Glass CompanyGeneral Ledger

	ASSETS
111	Cash
121	Accounts Receivable
141	Inventory
152	Prepaid Insurance
181	Equipment
189	Accumulated Depreciation

	LIABILITIES
211	Accounts Payable
231	Salaries Payable
250	Unearned Revenue
260	Notes Payable
261	Discount on Notes Payable
265	Income Taxes Payable

	EQUITY
311	Common Stock
331	Retained Earnings

	REVENUE
411	Sales Revenue

	EXPENSES
500	Cost of Goods Sold
511	Insurance Expense
512	Utilities Expense
521	Salaries Expense
532	Bad Debt Expense
540	Interest Expense
541	Depreciation Expense
559	Miscellaneous Expenses
910	Income Tax Expense

1. Prepare the necessary journal entries to record:

	1. the issuance of the note on November 16, 2019
	2. the related adjustment on December 31, 2019
	3. payment of the note on February 15, 2020
	4. interest expense for 2020 on February 15, 2020

General Journal Instructions

PAGE 1

GENERAL JOURNAL

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

2. Show how the preceding items would be reported on the December 31, 2019, balance sheet.

Balance Sheet Instructions

CLEAR GLASS COMPANY

Partial Balance Sheet

December 31, 2019

1	Current Liabilities:
2
3

3. What is Clear Glass Companys effective interest rate?

Additional Instructions

rate for 90 days