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hi Sir, i would like to know how to record loan note issue at discount.
for example, the company made an issue of 500,000 9% loan notes at a discount of 1 %, payable in full on application. application were received for 580,000 of loan notes. allotment was made and the excess application monies were refunded on the same.
1)application
Debit Bank 574,200
Credit application and allotment 574,2002)allotment
Debit Application and allotment 574200
Credit loan note 495000
Credit Bank-refunded 79200is the above records correct?
This smells to me of homework from your study course! Because Application and Allotment Accounts have not been asked at F7 for many, many years!
Personally, for the second journal, I would:
Dr Application and Allotment Account $574,200
Cr Loan Notes Account $500,000
Dr Discount on issue of Loan Notes $5,000
Cr Cash $79,200But what does your tutor say?
And, in future, don’t ask me to do your homework!
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