Accounts payable would be on the balance sheet. Discounts lost expense would be an extra expense on the income statement . Cash would be on asset…

Accounts payable would be on the balance sheet. Discounts lost expense would be an extra expense on the income statement . Cash would be on asset section of the balance sheet. The expense going to retained earnings is just a way to close out the books at the end of a period. (c) Which of the two methods do you prefer and why?