On November 1, 2021, FDN Trading accepted a 90-day, 8% P4,000,000 note from ABC Co. FDN immediately discounted with recourse the note to a bank that offers a 12% discount rate. FDN assumes the interest expense associated with this transaction. How much interest expense should FDN Trading debit on its records? Calculate the total interest expense and NOT the net interest expense.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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On November 1, 2021, FDN Trading accepted a 90-day, 8% P4,000,000 note from ABC Co. FDN
immediately discounted with recourse the note to a bank that offers a 12% discount rate. FDN
assumes the interest expense associated with this transaction. How much interest expense should
FDN Trading debit on its records? Calculate the total interest expense and NOT the net interest
expense.
Transcribed Image Text:On November 1, 2021, FDN Trading accepted a 90-day, 8% P4,000,000 note from ABC Co. FDN immediately discounted with recourse the note to a bank that offers a 12% discount rate. FDN assumes the interest expense associated with this transaction. How much interest expense should FDN Trading debit on its records? Calculate the total interest expense and NOT the net interest expense.
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