1. The account Discount on Notes Payable is: a. a contingent liabiity an asset b

Question

1. The account Discount on Notes Payable is: a. a contingent liabiity an asset because it has a debit balance. a contra liability amortizedto reduce interest d. expense over the life ofa note 2. On July 1, Tau, Inc, purchased a machine for $12,000 andissued in payment a one-year notepayable for $13,200. On August 31, the company's fiscal year-end, the proper entry would be Interest Expense Machinery Discount on Notes Payable Notes Payable a. 200 200 Discount on Notes Payable Interest Expense Interest Expense Discount onNotes Payable C. 200 200 d. 200

Explanation / Answer

1 Discount on notes payable is a contra liability 2 Interest expense 200          Discount on notes payable 200

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