Exercise 9-8: On October 1, 2016, Ratkowski Inc. borrowed $18,000 from the second national bank by issuing a 12-month note. The bank discounted the note at 9%.Prepare the journal entry needed to record the issuance of the note.Prepare the journal entry needed at December 31, 2016, to accrue interest.Prepare the journal entry to record the payment of the note on October 1, 2017.What effective rate of interest did Ratkowski pay?

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Answered: On October 1, 2016, Ratkowski Inc.…

Financial Accounting: The Impact on Decision Makers

10th Edition

ISBN:9781305654174

Author:Gary A. Porter, Curtis L. Norton

Publisher:Gary A. Porter, Curtis L. Norton

Chapter9: Current Liabilities, Contingencies, And The Time Value Of Money

Section: Chapter Questions

Problem 9.8E

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Exercise 9-8: On October 1, 2016, Ratkowski Inc. borrowed $18,000 from the second national bank by issuing a 12-month note. The bank discounted the note at 9%.

Prepare the journal entry needed to record the issuance of the note.
Prepare the journal entry needed at December 31, 2016, to accrue interest.
Prepare the journal entry to record the payment of the note on October 1, 2017.
What effective rate of interest did Ratkowski pay?

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