On November 1, Alan Company signed a 120-day, 9% note payable. with a face value
ID: 2406016 • Letter: O
Question
On November 1, Alan Company signed a 120-day, 9% note payable. with a face value of $24,000. Alan made the appropriate year-end accrual. What is the journal entry as of March 1 to record the payment of the note assuming no reversing entry was made? (Use 360 days a year.) Multiple Choice Debit Cash $24,360; credit Notes Payable $24,360 Debit Notes Payable $24,720, credit Interest Payable $360; credit Interest Expense $360: credit Cash $24,000. Debit Notes Payable $24,000, debit Interest Payable $360; credit Cash $24,360. Debit Notes Payable $24,000; debit Interest Expense $720. credit Cash $24.720 Debit Notes Payabie $24000: debit interest 6,of 27, ??? Next >Explanation / Answer
Answer
A
Notes Payable
$ 24,000.00
B
Interest rate
9%
C = A x B
360 days Interest (Annual Interest)
$ 2,160.00
D = C x 120/360
120 days Interest expense
$ 720.00
E
No. of days from 1 Nov to 31 Dec
60
F = D x E/360
Interest expense (accrued as payable) on 31 Dec
$ 360.00
G
Remaining no. of days
60
H = D x G/360 or D - F
Interest expense for remaining period
$ 360.00
Date
Accounts title
Debit
Credit
31-Dec
Interest expense
$ 360.00
Interest payable
$ 360.00
(interest payable accrued on year end)
01-Mar [ANSWER ENtry]
Notes Payable
$ 24,000.00
Interest expense
$ 360.00
Interest payable
$ 360.00
Cash
$ 24,720.00
(cash paid on maturity)
Correct answer, based on Journal entry #2 above on 1st Mar, is Option #5:
Debit Notes Payable $ 24,000
Debit Interest Expense $ 360
Debit Interest payable $ 360
Credit Cash $ 24,720
A
Notes Payable
$ 24,000.00
B
Interest rate
9%
C = A x B
360 days Interest (Annual Interest)
$ 2,160.00
D = C x 120/360
120 days Interest expense
$ 720.00
E
No. of days from 1 Nov to 31 Dec
60
F = D x E/360
Interest expense (accrued as payable) on 31 Dec
$ 360.00
G
Remaining no. of days
60
H = D x G/360 or D - F
Interest expense for remaining period
$ 360.00
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.