1. The journal entry a company uses to record the issuance of an interest-bearing note for the purpose of borrowing funds for the business is
A) debit Accounts Payable; credit Notes Payable
B) debit Cash; credit Notes Payable
C) debit Notes Payable; credit Cash
D) debit Cash and Interest Expense; credit Notes Payable
2. On October 30, Seba Salon, Inc. issued a 90-day note with a face amount of $60,000 to Reyes Products, Inc. for merchandise inventory. Determine the proceeds of the note assuming the note is discounted at 8%.
A) $55,200
B) $64,800
C) $58,800
D) $61,200