On July 1st 2015 ACME Company issued $20 million non-interest 1 year note to the bank who has a stated 10% discount rate. Principal and interest will be paid at maturity.
REQUIRED:
Record the journal entry ACME makes on July 1, 2015 when it issues the note.
Record the adjusting entry ACME makes on December 31, 2015
Record the entry ACME makes on June 30, 2016 when it pays off the note
What was the effective interest rate that ACME paid on this note?