Swain Enterprises issues a 60-day note for $800,000 to Hill Industries for merchandise inventory. Hill Industries discounts the note

Swain Enterprises issues a 60-day note for $800,000 to Hill Industries for merchandise inventory. Hill Industries discounts the note at 6%.

a. Journalize Swain Enterprises’ entries to record:
1. the issuance of the note.
2. the payment of the note at maturity.

b. Journalize Hill Industries’ entries to record:
1. the receipt of the note.
2. the receipt of the payment of the note at maturity


Answer:















a. 1. Merchandise Inventory 792,000
Interest Expense* 8,000
Notes Payable 800,000
2.
 Notes Payable 800,000
Cash 800,000
b. 1. Notes Receivable 800,000
Sales 792,000
Interest Revenue* 8,000
2.
 Cash 800,000
Notes Receivable 800,000
* $800,000 × 6% × 60/360