On October 1,2015,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 term of 1 year.The amount of cash that Harrison received on that date was $22,080.

Question

Quizplus · Accepted Answer

To calculate the amount of cash received, we need to subtract the discount from the face value.

Discount = Face Value x Discount Rate x Term
Discount = $24,000 x 8% x 1 year
Discount = $1,920

Cash Received = Face Value - Discount
Cash Received = $24,000 - $1,920
Cash Received = $22,080

On October 1,2015,Harrison Company Borrowed Money by Issuing a $24,000