Chapter 9, Problem 3E

Non-Interest-Bearing Notes Payable On November 16, 2019, Clear Glass Company borrowed $20,000 from First American Bank by issuing a 90-day, non-interest-bearing note. The bank discounted this note at 12% and remitted the difference to Clear Glass.

Required:

1. 1. Prepare the journal entries of Clear Glass to record the preceding information, the related calendar year-end adjusting entry, and payment of the note at maturity.
2. 2. Show how the preceding items Would be reported on the December 31, 2019, balance sheet.
3. 3. Next Level What is Clear Glass Company’s effective interest rate?