On October 1, 2012, Haywood Company borrowed money by issuing a $12,000 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 Haywood received on that date was $12,000.

Question

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When a discount note is issued, the amount of the discount is deducted from the face value of the note to determine the amount of cash received.

On October 1, 2012, Haywood Company Borrowed Money by Issuing