On November 1, 2021, a company signed a $100,000, 6%, six-month note payable with the amount borrowed plus accrued interest due six months later on May 1, 2022. The company records the appropriate adjusting entry for the note on December 31, 2021. In recording the payment of the note plus accrued interest at maturity on May 1, 2022, the company would:
A) Debit Interest Expense, $2,000.
B) Debit Interest Expense, $1,000.
C) Debit Interest Payable, $2,000.
D) Debit Interest Expense, $3,000.
Answer: A
On November 1, 2021, a company signed a $100,000, 6%, six-month note payable with the amount borrowed plus accrued interest due six months later on May 1, 2022. The company should report interest payable at December 31, 2021, in the amount of:
A) $0.
B) $1,000.
C) $2,000.
D) $3,000.
Answer: B
Bear Essentials borrowed $50,000 from Stacks Bank and signed a promissory note. What entry should Stacks Bank record?
A) Debit Cash, $50,000 Credit Notes Receivable, $50,000.
B) Debit Notes Receivable, $50,000 Credit Cash, $50,000.
C) Debit Cash, $50,000 Credit Notes Payable, $50,000.
D) Debit Notes Payable, $50,000 Credit Cash, $50,000.
Answer: B
