College Accounting (Book Only): A ...

13th Edition
Scott + 1 other
ISBN: 9781337280570



College Accounting (Book Only): A ...

13th Edition
Scott + 1 other
ISBN: 9781337280570
Textbook Problem

On August 5, M. Valenty borrowed $8,500 from Costner State Bank for 45 days, with a discount rate of 7 percent. Accordingly, M. Valenty signed a note for $8,500, dated August 5. Write entries in general journal form to record the following transactions:

  1. a. Issuance of the note on August 5.
  2. b. Payment of the note at maturity on September 19.

Check Figure

8/5 Notes Payable, $8,500


To determine

Journalize the issuance of note on August 5.


Journal entry: Journal entry is a set of economic events which can be measured in monetary terms. These are recorded chronologically and systematically.

Debit and credit rules:

  • Debit an increase in asset account, increase in expense account, decrease in liability account, and decrease in stockholders’ equity accounts.
  • Credit decrease in asset account, increase in revenue account, increase in liability account, and increase in stockholders’ equity accounts.

Journalize the issuance of discounted note on August 5.

Date Account Titles and Explanation Post Ref. Debit ($) Credit ($)
August 5 Cash   8,425.62  
    Interest Expense   74.38  
       Notes Payable     8,500.00
    (Record discounted note payable issued)      

Table (1)


  • Cash is an asset account. Since cash is received, asset account increased, and an increase in asset is debited.
  • Interest Expense is an expense account...


To determine

Journalize the payment of principal amount on September 19 (maturity date).

Still sussing out bartleby?

Check out a sample textbook solution.

See a sample solution

The Solution to Your Study Problems

Bartleby provides explanations to thousands of textbook problems written by our experts, many with advanced degrees!

Get Started

Additional Business Solutions

Find more solutions based on key concepts

Show solutions add

How might a firms corporate WACC be affected by the size of its capital budget?

Fundamentals of Financial Management (MindTap Course List)

Identify and describe the major Ingredients of a promotion mix.

Foundations of Business (MindTap Course List)

MATURITY RISK PREMIUM An investor in Treasury securities expects inflation to be 2.5% in Year 1,3.2% in Year 2,...

Fundamentals of Financial Management, Concise Edition (with Thomson ONE - Business School Edition, 1 term (6 months) Printed Access Card) (MindTap Course List)

What is commodity money? What is flat money? Which kind do we use?

Principles of Macroeconomics (MindTap Course List)

What approach does JIT take to minimize total inventory costs?

Cornerstones of Cost Management (Cornerstones Series)