The entry to record the cash received on a note discounted at less than face value is to:
A)debit Cash,credit Interest Income,and credit Notes Receivable.
B)debit Cash,debit Interest Expense,and credit Notes Receivable.
C)debit Cash and credit Interest Expense.
D)debit Notes Receivable and credit Cash.

Question

Quizplus · Accepted Answer

When a note is discounted at less than face value, the interest expense is recorded upfront and deducted from the face value of the note. Therefore, we need to debit Cash for the amount received, debit Interest Expense for the upfront interest, and credit Notes Receivable for the face value of the note.

The Entry to Record the Cash Received on a Note