The journal entry recorded by a company when it signs a noninterest-bearing note in exchange for a tract of land would include a:
A)debit to Discount on Notes Payable
B)credit to Interest Payable
C)debit to Notes Payable
D)credit to Land

Question

Quizplus · Accepted Answer

When a company signs a noninterest-bearing note, the note is recorded at its present value. The difference between the face value of the note and its present value is recorded as a discount on notes payable, which is a contra liability account.

The Journal Entry Recorded by a Company When It Signs