Question

THIS IS THE FORMAT

Here is the problem: Deleron Company is in the soap manufacturing business. On October 17, 2019, the company borrowed some money by discounting its own $50,000 noninterest-bearing, 180-day note at First Nevada Bank at a discount rate of 8%. Required: By rounding all calculations to the nearest penny, and using a 360-day year as described in the textbook for simplicity purposes, prepare dated journal entries to record the following: A. The original discounting of the note on October 17, 2019 B. The adjusting entry needed at the end of the 2019 calendar year accounting period C. Payment of the note at maturity on the appropriate date

Answer 1

Journal Entries
Sr. No.	Date	Account Title and explanation	Debit	Credit
	PART A
1	Oct 17, 2019	Cash	$48,000
		Discount on Notes ($ 50,000 X 8% X 180 /360 Days)	$2,000
		Note Payable		$50,000
	PART B
2	Dec 31, 2019	Interest Expenses	$833
		Discount on note Payable		$833
	PART C
3	April 14, 2020	Interest Expenses	$1,167
		Note Payable	$50,000
		Discount on note Payable		$1,167
		Cash		$50,000
	WORKING NOTES:
		CALCULATION OF INTEREST EXPENSES AS ON DECEMBER 31
			AMOUNT
		Total Discounted value	$2,000.00
		Days upto December 31 = 14 Days In Octoner =	14
		Days in November	30
		Days in december	31
		Total Days till december	75
		Interest Expenses = $ 2000 X 75 Days / 180 Days	$833.33
		Matuirty Date:
		Days till December 31 as above =	75
		Days in January	31
		Days in February	29
		Days in March	31
		Days in April	14
		Total	180
		Matuirty Date = 14th April 2020