On August 31, Latty Co. partially refunded $450,000 of its outstanding 10% note payable made one year ago to Dugan State Bank by paying $450,000 plus $45,000 interest, having obtained the $495,000 by using $131,000 cash and signing a new one-year $400,000 note discounted at 9% by the bank.
Instructions(1) Make the entry to record the partial refunding. Assume Latty Co. makes reversing entries when appropriate.(2) Prepare the adjusting entry at December 31, assuming straight-line amortization of the discount.

Question

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The Answer of On August 31, Latty Co. partially refunded $450,000 of its outstanding 10% note payable made one year ago to Dugan State Bank by paying $450,000 plus $45,000 interest, having obtained the $495,000 by using $131,000 cash and signing a new one-year $400,000 note discounted at 9% by the bank.
Instructions(1) Make the entry to record the partial refunding. Assume Latty Co. makes reversing entries when appropriate.(2) Prepare the adjusting entry at December 31, assuming straight-line amortization of the discount.