On October 1,Year 1,Harrison Company borrowed money by issuing a $24,000 face value discount note to its bank.The note had an 8% discount rate and had a one-year term to maturity.On December 31,Year 1,Harrison should accrue interest expense in the amount of $1,920.

Question

Quizplus · Accepted Answer

Discount = $24,000 × 8% = $1,920
Interest expense = $1,920 ÷ 12 months × 3 months (Oct.1-Dec.31)= $480

On October 1,Year 1,Harrison Company Borrowed Money by Issuing a $24,000