Discount is interest taken in advance. An illustration has been given of discounts collected in connection with the process of discounting a bill, but take as another the following: Webb & Company discounts a $6,000 ninety-day note of one of its customers, which as of the date of discount has sixty days to run. The sixty days is, of course, the time for which the bank extends credit on the note. The entries are as follows:

Debit: Bills Discounted (2)...........

$6,000

Credit: Discount (31) .............

$ 60

Credit: Due to Depositors (37).....

(The Webb Co. on the Depositors' Ledger)

5,940