Cynthia Dixie Accounting Inc.takes advantage of a well-known office furnishings store's low-interest-rate financing.Cynthia buys furniture on the first day of its fiscal year,signing a $19,000,five-year note.The note is payable in full at maturity.Interest is payable annually at 2%.The market rate of interest for similar transactions is 5%.
Requirement:
Prepare journal entries to record:
a.The purchase of the office furniture.
b.The payment of interest and related amortization of the discount at the end of year 1.

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The Answer of Cynthia Dixie Accounting Inc.takes advantage of a well-known office furnishings store's low-interest-rate financing.Cynthia buys furniture on the first day of its fiscal year,signing a $19,000,five-year note.The note is payable in full at maturity.Interest is payable annually at 2%.The market rate of interest for similar transactions is 5%.
Requirement:
Prepare journal entries to record:
a.The purchase of the office furniture.
b.The payment of interest and related amortization of the discount at the end of year 1.