Zero-interest-bearing note based problem


Edson Corp. signed a three-month, zero-interest-bearing note on November 1, 2008 for the purchase of $150,000 of inventory. The face value of the note was $152,205. Assuming Edson used a "Discount on Note Payable" account to initially record the note and that the discount will be amortized equally over the 3-month period, the adjusting entry made at December 31, 2008 will include a

A) debit to Discount on Note Payable for $735.

B) debit to Interest Expense for $1,470.

C) credit to Discount on Note Payable for $735.

D) credit to Interest Expense for $1,470.

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Accounting Basics: Zero-interest-bearing note based problem
Reference No:- TGS095829

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