Ask Question
27 January, 19:11

Bramble Corp. signed a three-month, zero-interest-bearing note on November 1, 2020 for the purchase of $498700 of inventory. The face value of the note was $511000. Bramble used a Discount of Note Payable account to initially record the note. Assuming that the discount will be amortized equally over the 3-month period and that there was no adjusting entry made for November, the adjusting entry made at December 31, 2020 will include a

+2
Answers (1)
  1. 27 January, 22:34
    0
    Amortization of the discount at December 31, 2020 will include: a debit to interest expense for $8,200.

    Explanation:

    Note is a promissory note with a written promise made by the borrower to the lender (payee) to pay a certain, definite sum at a specified date.

    Since the face value of the note was $511,000 and the inventory was $498,700, then discount on the note is $12,300.

    Amortization of the discount at December 31, 2020 will include: $12,300 / 3 x 2 months = $8,200.
Know the Answer?
Not Sure About the Answer?
Find an answer to your question ✅ “Bramble Corp. signed a three-month, zero-interest-bearing note on November 1, 2020 for the purchase of $498700 of inventory. The face value ...” in 📘 Business if you're in doubt about the correctness of the answers or there's no answer, then try to use the smart search and find answers to the similar questions.
Search for Other Answers