Problem 8-1

March 1 Cash 2,000,000

Notes Payable-Bank 2,000,000

April 1 Cash 980,000

Sales Discount 20,000 (1,000,000 x 2%)
Accounts Receivable 1,000,000

June 1 Cash 2,000,000 (3,000,000 - 1,000,000)

Accounts Receivable 2,000,000

### Notes Payable-Bank 2,000,000

Interest Expense 120,000 (2,000,000 x 12% x 6/12)
Cash 2,120,000
Problem 8-2
Requirement 1
2022
Oct. 1 Cash 3,600,000
Discount on Notes Payable 400,000 (4,000,000 x 10%)
Notes Payable-Bank 4,000,000

Interest Expense 100,000 (400,000 x 3/12)

Discount on Notes Payable 100,000

2023
Oct.1 Notes Payable-Bank 4,000,000
Cash 4,000,000

Dec. 31 Interest Expense 300,000 (400,000 x 9/12)

Discount on Notes Payable 300,000

Requirement 2

Current Liabilities
Notes Payable-Bank 4,000,000 The accounts of 5,000,000 are pledged to secure the ban
Discount on Notes Payab -300,000 (4,000,000 x 10% x 3/12)
Carrying Amount 3,700,000
,000 x 10%)

are pledged to secure the bank loan of 4,000,000

x 10% x 3/12)