Answer to Question #213383 in Accounting for Milan

Question

Debit Discount on Notes Payable

Credit Unearned Revenue

What does this journal entry mean? Thank you.

Answer 1

Solution:

Discount on Notes Payable arises when the amount paid for a note by investors is less than its face value. On the other hand, unearned revenue refers to the amount received in advance by a customer for an exchange of goods and services not yet delivered.

 

The journal entry means that you have received a discount on notes payable proceeds that have not been earned yet, that is for services that have not been issued. Discount on notes payable income received in advance.