On August 31, Latty Co. partially refunded $467,000 of its outstanding 10% note

Question

On August 31, Latty Co. partially refunded $467,000 of its outstanding 10% note payable made one year ago to Dugan State Bank by paying $467,000 plus $46,700 interest, having obtained the $513,700 by using $136,960 cash and signing a new one-year $414,000 note discounted at 9% by the bank. Make the entry to record the partial refunding. Assume Latty Co. makes reversing entries when appropriate. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit August 31 SHOW LIST OF ACCOUNTS LINK TO TEXT Prepare the adjusting entry at December 31, assuming straight-line amortization of the discount. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit December 31

Explanation / Answer

Debit   Credit Note payable $467,000 Interest payable $46,700 To Cash $136,970 To Note payable $376,730 Cash $37,270 To Note payable $37,270

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