Question

On December 1, Christy Co. accepted a 60-day, 6%, $1,000 note due January 30. On December 31, the appropriate year-end adjusting entry was made. On January 30, the note was honored and paid in full. The entry to record receipt of payment on January 30 (assuming no reversing entry was made) would include a credit to: (Check all that apply.)

Answer 1

Answer:

Entry for the repayment involve a Debit of Note Payable of $1,060 and a Credit of Cash of $1,060.

Explanation:

By January 30 , 2 months interest would have expired and the journal entries are as follows :

December 31

Interest expense $30 (debit)

Note Payable $30 (credit)

January 30

Interest expense $30 (debit)

Note Payable $30 (credit)

Thus the repayment will be at the carrying cost of the note payable as follows :

Note Payable $1,060 (debit)

Cash $1,060 (credit)

Conclusion :

Entry for the repayment involve a Debit of Note Payable of $1,060 and a credit of Cash of $1,060.