1 The account Discount on Notes Payable is a contingent liability an asset becauseit has a debit balance a contra liabilitv amortizedto reduce interest expense over the life ofa note. d. 2. On July 1, Tau, Inc., purchased a machine for$12,000 andissued in payment a one-yearnote payable for $13,200. On August 31, the company's fiscal year-end, the proper entry would be Interest Expense Machinery Discount on Notes Payable Notes Payable 200 200 200 200 Discount on Notes Payable 200 200 200 200 Interest Expense Interest Expense d. Discount on Notes Payable 3. Moore Realty just completed the purchase ofan apartment complex on August 1 for $100,000 down and an 1196, 20-year, $400,000 mortgage note. The note requires monthly principal andinterest payments of $4,129, with interest computed on the unpaidnote balance. The entry to record the September 1 payment would be Mortgage Note Payable Cash 4,129 2,064 2,065 Interest Expense Mortgage Note Payable Cash 4,129 454 3,667 Interest Expense Mortgage Note Payable Cash 4,129 3,667 462 d. Interest Expense Mortgage Note Payable Cash 4,129 4. On March 1, 19X4, Grand Junction Railroad issued $50,000 of 896, 10-year bonds dated March 1 for $43,769. Interest is payable on March 1 and September1. If Grand Junction uses the straight-line method ofamortization, how would these bonds appear on the September1, 19X4, balance sheet? (Round all calculations to the nearest dollar.) Long-tem liabilities $50,000 Bondspayable Less: Discount on bonds payable 6.231 $43,769 Long-tem liabilities Bondspayable Plus: Discount onbonds payable $43,769 6.231 $50,000 Long-tem liabilities Bondspayable Less: Discount on bondspayable $50,000 5.919 $44,081 d. Long-tem liabilities $44,081 Bondspayable Plus: Discount onbondspayable 5919 S50,000