Contemporary Furniture, a wholesale distributor of modern casual furniture, frequently accepts promissory notes from its customers at the time of sale. Since Contemporary Furniture regularly needs cash to meet its own obligations, it frequently discounts these notes at the bank.
Contemporary Furniture's accountant tells you that she does not bother to credit discounted notes to a Notes Receivable-Discounted account. Instead, she makes an entry debiting Cash and Interest Expense and crediting Notes Receivable (and Interest Income when appropriate). She says that using a Notes Receivable-Discounted account "just makes extra work, and, anyway, once the note is discounted, it becomes the bank's problem."
What is your reaction to the bookkeeper's comments?