On August 15, your company received $95,000 and signed a note payable agreeing to pay Bank of America $100,000 in one year. You do not need to make any monthly interest payments. Which of the following is true regarding the journal entry you should make on the day you signed the note payable?

1. Discount on Notes Payable should be debited for $5,000.

2. Discount on Notes Payable should be credited for $95,000.

3. Discount on Notes Payable should be credited for $5,000.

4. Discount on Notes Payable should be debited for $100,000.

5. Discount on Notes Payable should be debited for $95,000.

6. Discount on Notes Payable should be credited for $100,000.