Answer: D, please explain.

On December 1, 2015, Sons, Inc. borrowed money at the bank by signing a 90-day non-interest-bearing note for $40,000 that was discounted at 12%. Which of the following entries is not correct?

a. December 31, 2015

Interest Expense 400

Discount on Note Payable 400

b. Feb. 1, 2016

Interest Expense 800

Discount on Note Payable 800

c. December 31, 2015

Discount on Note Payable 400

Interest Expense 400

d. December 1, 2015

Cash 38,800

Discount on Note Payable 1,200

Note Payable 40,000