131. On August 1, 2011, Lucy & Co. borrowed money from the bank by issuing a one year, $6,000 face value discount note. The note carried a 6% discount rate.
a) Prepare the journal entry to record the issuance of the note.
b) Compute the amount of interest expense that will be shown on the 2011 income statement and prepare the appropriate journal entry.
c) What is the total amount of cash that will be paid to the bank at the maturity of the note on August 1, 2011? Prepare all necessary journal entries on August 1, 2011 (assume the note was paid in full).
d) Prepare the liabilities section of the balance sheet at December 31, 2011.
132. Van Dyke Company received proceeds of $144,750 from discounting a $150,000, one year, discount note at Three-Rivers Bank.
a) What discount rate did the bank use?
b) Prepare the journal entry to record the proceeds of the loan.