Omega Company granted an extension on an open account by accepting a 90-day, 6 percent note for $3,000, dated July 25. To raise cash, it sold the note to a bank on August 25. The bank charged a discount rate of 7 percent. Assume a 360-day year. Which of the following is the entry to record the transaction on August 25 in Omega Company's general journal? Round off the calculations to two decimal places.
A) No entry till maturity date
B) Debit Cash by $2,975.07, Interest Expense by $24.96; credit Notes Receivable by $3,000
C) Debit Cash by $3,004.15, Discount by $45; credit Notes Receivable by $3,000, Interest Income by $40.85
D) Debit Cash by $3010.07; credit Interest Income by $10.07, Notes Receivable by $3,000

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The Answer of Omega Company granted an extension on an open account by accepting a 90-day, 6 percent note for $3,000, dated July 25. To raise cash, it sold the note to a bank on August 25. The bank charged a discount rate of 7 percent. Assume a 360-day year. Which of the following is the entry to record the transaction on August 25 in Omega Company's general journal? Round off the calculations to two decimal places.
A) No entry till maturity date
B) Debit Cash by $2,975.07, Interest Expense by $24.96; credit Notes Receivable by $3,000
C) Debit Cash by $3,004.15, Discount by $45; credit Notes Receivable by $3,000, Interest Income by $40.85
D) Debit Cash by $3010.07; credit Interest Income by $10.07, Notes Receivable by $3,000

Omega Company Granted an Extension on an Open Account by Accepting