Exercise 2. Short-Term Notes Payable Issued at a Discount: a. On 3/1 Year 7 a corporation "discounts" a $36,000 face value, six-month, 5% NOTE PAYABLE/receiving CASH for the net amount borrowed / after the amount of the INTEREST EXPENSE is deducted from the maturity value. Calculation of INTEREST EXPENSE at 3/1 Year 7: Maturity Value X Rate X Time INTEREST EXPENSE $ X .05 X _= $ Phrase 1st: Account Category Affect Dr. or Cr. AL SERE contra - Dr Cr 2nd: AL SERE contra - Dr Cr 3rd: AL SE RE contra - Dr Cr Date Accounts Debit Credit b. On 9/1 Year 7, the maturity date, the NOTES PAYABLE is paid off/ with a CASH payment. Phrase 1st: Account Category Affect Dr. or Cr. AL SERE contra - Dr Cr 2nd: AL SE RE contra - Dr Cr Date Accounts Debit Credit