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Partial Refund of Note Payable, Straight line Amortization

On August 31, Jenks Co. partially refunded $180,000 of its outstanding 10% , note payable, made 1 year ago to Arma State Bank by paying $180,000 plus $18,000 interest (having obtained the $198,000 by using $52,400 cash and siging a new 1-year $160,000 note discounted at 9% by the bank)

1. Make the entry to record the partial refunding. Assume Jenks Co. makes reversing entries when appropriate.

2. Prepare the adjusting entry at December 31, assuming straight-line amortization of the discount.

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Notes payable, Discounted Note Payable, Partial Refund of Note Payable, Amortization ...

Solution Summary

On August 31, Jenks Co. partially refunded $180,000 of its outstanding 10% , note payable, made 1 year ago to Arma State Bank by paying $180,000 plus $18,000 interest (having obtained the $198,000 by using $52,400 cash and siging a new 1-year $160,000 note discounted at 9% by the bank)

1. Make the entry to record the partial refunding. Assume Jenks Co. makes reversing entries when appropriate.

2. Prepare the adjusting entry at December 31, assuming straight-line amortization of the discount.

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