On January 1, 2010, Boiler Company received two notes for merchandise sold:
Note 1: A $10,000, 10%, 60 day note from Wildcat, Inc.
Note 2: A $20,000, 8%, three year interest bearing note from Gopher, Inc.On January 1, 2010, the fair rate of interest was 10%. Needing cash to meet the upcoming payroll, Boiler Company discounted the Wildcat, Inc., note at the local bank at 14% on January 12, 2010. On March 2, 2010, Wildcat, Inc., remitted the full amount owed to the bank.
Required:
Prepare journal entries on the books of Boiler Company to record the receipt of the two notes on January 1, 2010, the discounting of the Wildcat note on January 12, 2010, the payment by Wildcat to the bank on March 2, 2010, and the interest on the Gopher note on December 31, 2010. Round all calculations to the nearest dollar and use a 360 day year. (Contributed by Scott I. Jerris)