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Grouper Corporation borrowed $60,300 on November 1, 2020, by signing a $61,920, 3-month, zero-interest-bearing note. Prepare Grouper’s November 1, 2020, entry; the December 31, 2020, annual adjusting entry; and the February 1, 2021, entry. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually. Record journal entries in the order presented in the problem.)

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TomShelby

Answer:

Cash   60,300 debit

discount on NP 1,620

   Note payable        61,920 credit

interest expense 1,080 debit

   discount on Note Payable    1,080 credit

interest expense 540 debit

note payable   61,920 credit

   discount on Note Payable    540 credit

   cash                                   61,920 credit

Explanation:

when the note is signed:

note nominal              61, 920

actual cash received (60,300)

discount on NP              1,620

year-end adjustment:

amortization from Nov 1st to Dec 31th: 2 months

1,620 x 2 months / 3 months  = 1,080

at maturity:

for the last month: 1,620  x 1 month / 3 month =  540

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