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On January 1, 2020, Smith Company purchased a cargo van. The firm paid $7,500 cash...

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Accounting

On January 1, 2020, Smith Company purchased a cargo van. The firm paid $7,500 cash as a down payment, and signed a noninterest bearing note that required $35,000 to be paid on December 31, 2025. The fair value of van was not able to be determined. A bank would charge 6% interest for this kind of loan. The fiscal year ends on December 31. When the journal entry is made to record this purchase, which of the following properly represents what happens to the discount account? Round to the nearest dollar.

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