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. The amount of cash that Harrison received on that date was $22,080.
Answer the following statement true (T) or false (F)
True
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.
Proceeds from discounted note = Face value of $24,000 ? Discount of ($24,000 × 8%) = $22,080
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