Give the general journal entry to record each of the following transactions for Dennis Company: 1. Issued

Question:

Give the general journal entry to record each of the following transactions for Dennis Company:

1. Issued a 6-month, 9 percent note for $85,000 to purchase two forklifts on May 14, 2016 (debit Warehouse Equipment).

2. Discounted its own 180-day, noninterest-bearing note with a principal amount of $39,000 at the Nelson Bank and Trust on May 28, 2016. The bank charged a discount rate of 10 percent.

3. Paid the May 14 note on its due date.

4. Paid the note discounted on May 28 on its due date.

Analyze: What is the total interest expense for the year as a result of these transactions?

Discount Rate
Depending upon the context, the discount rate has two different definitions and usages. First, the discount rate refers to the interest rate charged to the commercial banks and other financial institutions for the loans they take from the Federal...