On August 31, Demich Co. partially refunded $180,000 of its
outstanding 10% note payable made one year ago to Best Fededral Bank by
paying $180,000 plus $18,000 interest, having obtained the $198,000 by
using $52,400 cash and signing a new one-year $160,000 note discounted
at 9% by the bank.
(1) Make the entry to record the partial refunding. Assume Demich Co. makes reversing entries when appropriate.
(2) Prepare the adjusting entry at December 31, assuming straight-line amortization of the discount.