Answer:
Debit Cash and Interest Expense; Credit Notes Payable.
Explanation:
This Journal entry would increase Cash, Interest Expense; and Notes Payable. For example, a borrower would receive $9,901 (proceeds) for a $10,000 (face value) note discounted $101 the journal entry would be debit Cash $9,901, debit Interest Expense $101 and credit Notes Payable $10,000.
