Accounting entries on the discount

1, the promissory note is transferred to another company:

Credit: notes payable 8 million

Borrow: accounts payable (or other receivables) 8 million

2, discounted back:

Borrow: bank deposits 7.6 million

Borrow: finance charges 0.4 million

Credit: accounts payable (or other receivables) 8 million million

Discounted interest must be discounted vouchers, no discounted vouchers, not deductible before tax. That means the $400,000 interest is also subject to $100,000 in corporate income tax (at a 25% rate).

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