On August 31, XYZ Co. partially refunded SAR180,000 of its outstanding 10% note payable made...
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Accounting
On August 31, XYZ Co. partially refunded SAR180,000 of its outstanding 10% note payable made one year ago to ABC State Bank by paying SAR180,000 plus SAR18,000 interest, having obtained the SAR198,000 by using SAR52,400 cash and signing a new one-year SAR160,000 note discounted at 9% by the bank.
Instructions
1- Make the entry to record the partial refunding. Assume XYZ Co. makes reversing entries when appropriate.
2- Prepare the adjusting entry at December 31, assuming straight-line amortization of the discount.
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