Question: On October 1, 2014, Ratkowski Inc. borrowed $18,000 from Second National Bank by issuing a 12-month note. The bank discounted the note at 9%. Required

On October 1, 2014, Ratkowski Inc. borrowed $18,000 from Second National Bank by issuing a 12-month note. The bank discounted the note at 9%.

Required
1. Prepare the journal entry needed to record the issuance of the note.
2. Prepare the journal entry needed at December 31, 2014, to accrue interest.
3. Prepare the journal entry to record the payment of the note on October 1, 2015.
4. What effective rate of interest did Ratkowski pay?

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