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3 October, 10:09

Samson Corporation issued a 4-year, $75,000, zero-interest-bearing note to Brown Company on January 1, 2020, and received cash of $47,664. The implicit interest rate is 12%.

Prepare Samson's journal entries for:

(a) the January 1 issuance and (b) the December 31 recognition of interest.

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  1. 3 October, 10:26
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    Samson's journal entries for:

    (a) The January 1 issuance of Note payable

    Dr. Cash 47,664

    Cr. Note Payable 47,664

    (b) The December 31 recognition of interest

    Dr. Interest Expense 5,720

    Cr. Interest Payable 5,720

    Explanation:

    Interest Calculation for the year

    47,664 X 12% = 5,720
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