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: INTEREST Maturity Value X Rate X Time EXPENSE $ X .05 X $ Phrase 1st: 2nd: Account Category Affect Dr. or Cr. AL SERE contra + Dr Cr AL SERE contra + Dr Cr 3rd: AL SERE contra + Dr Cr Date Accounts Debit Credit