Business Assignment-Partially refunded
On August 31, Latty Co. partially refunded $493,000 of its outstanding 10% note payable made one year ago to Dugan State Bank by paying $493,000 plus $49,300 interest, having obtained the $542,300 by using $137,350 cash and signing a new one-year $445,000 note discounted at 9% by the bank.
(a) Make the entry to record the partial refunding. Assume Latty Co. makes reversing entries when appropriate.
(b) Prepare the adjusting entry at December 31, assuming straight-line amortization of the discount.
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