# Entries for discounting notes payable Ramsey Company issues an $800,000, 45-day note to Buckner Company for merchandise inventory. Buckner discounts the note at 7%. a. Journalize Ramsey’s entries to record: 1. the issuance of the note. 2. the payment of the note at maturity. b. Journalize Buckner’s entries to record: 1. the receipt of the note. 2. the receipt of the payment of the note at maturity. BuyFindarrow_forward ### Financial Accounting 15th Edition Carl Warren + 2 others Publisher: Cengage Learning ISBN: 9781337272124 #### Solutions Chapter Section BuyFindarrow_forward ### Financial Accounting 15th Edition Carl Warren + 2 others Publisher: Cengage Learning ISBN: 9781337272124 Chapter 11, Problem 3E Textbook Problem 10 views ## Entries for discounting notes payableRamsey Company issues an$800,000, 45-day note to Buckner Company for merchandise inventory. Buckner discounts the note at 7%. a. Journalize Ramsey’s entries to record: 1. the issuance of the note. 2. the payment of the note at maturity. b. Journalize Buckner’s entries to record: 1. the receipt of the note. 2. the receipt of the payment of the note at maturity.

a. 1

To determine

Journalize issuance of the note.

### Explanation of Solution

Note Payable: Note payable is an obligation of the business to pay to its creditors, in future for the benefits received that carry some interest.

Journalize the entry to record the issuance of the note.

 Date Account Title and Explanation Post Ref. Debit ($) Credit ($) Merchandise Inventory 793,000 Interest Expense (1) 7,000 Note Payable 800,000 (To record the issuance of discounted notes for merchandise inventory)

Table (1)

• Merchandise Inventory is an asset and it is increased. So debit it by $793,000. • Interest Expense is a component of stockholders’ equity and decreased it. So, debit Interest Expense by$7,000...

a. 2

To determine

Journalize the payment of note at maturity.

b. 1

To determine

Journalize receipts of notes.

b. 2

To determine

Journalize the receipts of payment of note at maturity.

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