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1 November, 09:18

Federal Bank of America has loaned $9,000 to Southgate Animal Hospital, using a 90-day non-interest-bearing note. The bank discounted the note at 8%. The debit to Discount on Notes Payable in the general journal will be in the amount of

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  1. 1 November, 11:01
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    Answer: $180

    Explanation:

    From the question, Federal Bank of America has loaned $9,000 to Southgate Animal Hospital, using a 90-day non-interest-bearing note. The bank discounted the note at 8%.

    Therefore, the debit to Discount on Notes Payable in the general journal will be:

    = $9,000 * 8% * 90/360

    = $9,000 * 8/100 * 1/4

    = $9,000 * 0.08 * 0.25

    = $180

    The correct answer is $180

    It should be noted that we used 360 days for a year.
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