1. On august 31, Able Co. partially refunded $180,000 of its outstanding 10% note payable made one year ago to Best Federal Bank by paying $180,000 plus $18,000 interest, having obtained the $198,000 by using $52,400 cash signing a new one-year $160,000 note discounted at 9% by the bank.
Instruction
1. Make the entry to record the partial refunding. Assume Able Co. makes reversing entries when appropriate.
2. Prepare the adjusting entry at December 31, assuming straight- line amortization of the discount.