On October 1, Year 1, 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 one-year term to maturity. On December 31, Year 1, Harrison should accrue interest expense in the amount of $1,920.
Answer the following statement true (T) or false (F)
False
Discount = $24,000 × 8% = $1,920
Interest expense = $1,920 ÷ 12 months × 3 months (Oct. 1-Dec. 31) = $480
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