Asked by Avery Burton on Jun 30, 2024
Verified
On June 1, Mike's Motorcycle Shop accepted a 90-day, 10%, $8,000 note from a customer from the sale of a motorcycle. On July 21, after 50 days, Mike discounted the note at First Bank at 8%. Record the journal entries for Mike's Motorcycles.
Discounted Note
A promissory note or bond sold at a price lower than its face value, which will pay the face value at maturity.
- Acquire knowledge on the theories and accounting entries pertinent to the creation, depreciation, and repayment of notes receivable and payable.
- Record the proceeds and discount transactions of notes receivable and payable.
Verified Answer
KJ
Keisha JohnsonJul 02, 2024
Final Answer : 
Interest: $8,000 × 10% × 90/360 = $200.00
Maturity Value: $8,000 + $200.00 = $8,200
Bank Discount: $8,200 × 8% × 40/360 = $72.88
Proceeds: $8200 - $72.88 = $8,127.12
Interest: $8,000 × 10% × 90/360 = $200.00Maturity Value: $8,000 + $200.00 = $8,200
Bank Discount: $8,200 × 8% × 40/360 = $72.88
Proceeds: $8200 - $72.88 = $8,127.12
Learning Objectives
- Acquire knowledge on the theories and accounting entries pertinent to the creation, depreciation, and repayment of notes receivable and payable.
- Record the proceeds and discount transactions of notes receivable and payable.