Asked by Heather Robertshaw on May 10, 2024
Verified
Describe the recording procedures for the issuance, retirement, and paying of interest for notes.
Retirement
The act of leaving one's job and ceasing to work, typically due to age or health reasons, often requiring financial planning.
- Acquire knowledge on the fundamentals and outcomes of issuing installment notes along with the methods for repayment.
- Master the practices and journal documentation associated with the issuance, interest payment, and extinguishment of bonds and notes.
Verified Answer
CD
Ciera DoranMay 15, 2024
Final Answer :
At issuance, the proceeds from a note must be recognized in the appropriate asset account and the debt must be recognized as a note payable. Each interest payment (or interest plus principal payment) is recorded with a debit to Interest Expense (and a debit to Notes Payable when principal is involved) and a credit to Cash. The retirement of a note is recognized with a debit to Notes Payable and a credit to Cash (or other asset).
Learning Objectives
- Acquire knowledge on the fundamentals and outcomes of issuing installment notes along with the methods for repayment.
- Master the practices and journal documentation associated with the issuance, interest payment, and extinguishment of bonds and notes.
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