On October 1, 2016, Ratkowski Inc. borrowed $18,000 from Second National Bank by issuing a 12-month note. The bank disco

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On October 1 2016 Ratkowski Inc Borrowed 18 000 From Second National Bank By Issuing A 12 Month Note The Bank Disco 1 (59.8 KiB) Viewed 49 times

On October 1, 2016, Ratkowski Inc. borrowed $18,000 from Second National Bank by issuing a 12-month note. The bank discounted the note at 9%. Required: 1. Prepare the journal entry needed to record the issuance of the note. Indicate the effect on financial statement items by selecting for decrease (or negative effect), "+" for increase (or positive effect) and "NE" for No Entry (or no effect) on the financial statement. Balance Sheet Date 2016 Cct. 1 Journal Date 2016 Dec. 31 Description Debit Credit Journal Description Debit Credit Assets Journal 2. Prepare the journal entry needed at December 31, 2016, to accrue interest. Use months in calculation. Indicate the effect on financial statement items by selecting for decrease (or negative effect), "+' for increase (or positive effect) and "NE" for No Entry (or no effect) on the financial statement. Date Description Debit Credit 2017 Oct. 1 Assets Stockholders' = Liabilities + Equity Assets Balance Sheet Liabilities + Stockholders' Equity Liabilities Revenues Stockholders' Equity Revenues Income Statement Expenses 3. Prepare the journal entry to record the payment of the note on October 1, 2017. Indicate the effect on financial statement items by selecting "-" for decrease (or negative effect), "+' for increase (or positive effect) and "NE" for No Entry (or no effect) on the financial statement. Balance Sheet Income Statement Revenues Income Statement Expenses = Net Income Expenses Net Income Net Income 4. What effective rate of interest did Ratkowski pey? Round effective interest rate calculations to four decimal places, but enter as a percentage with two decimals; for example, .17529 rounds to .1763 and would be entered as 17.63, indicating 17.63%.