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On March 1st, Luna Inc. borrows $50,000 from a bank for working capital needs. The loan is discounted so the net proceeds to Luna Inc.

On March 1st, Luna Inc. borrows $50,000 from a bank for working capital needs. The loan is discounted so the net proceeds to Luna Inc. are $48,800 and are due in 8 months. At the end of March after all of Luna Inc.'s adjusting entries are made, which of the following is true with respect to the loan?

A: Liabilities would increase.

B: EPS will not be affected.

C: EPS would increase.

D: Liabilities would decrease.

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