The company determines the interest expense associated with this transaction by subtracting the disc

The company determines the interest expense associated with this transaction by subtracting the disc

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The company determines the interest expense associated with this transaction by  subtracting the discounted value of the note from the note's face value plus any interest  revenue the company has earned from the note. Since the company discounts the note 
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Unformatted text preview: before earning any interest revenue, interest expense is $78.08 ($5000.00 - $4,921.92). The company records this transaction by debiting cash for $4,921.92, debiting interest expense for $78.08, and crediting notes receivable for $5,000.00....
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This note was uploaded on 11/14/2011 for the course ACCT 1310 taught by Professor Staff during the Fall '10 term at Texas State.

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