Question

Martinez Co. borrowed $75,600 on March 1 of the current year by signing a 60-day, 9%, interest-bearing note. Assuming a 360-day year, when the note is paid on April 30, the entry to record the payment should include a ______ .
a. debit to Interest Payable for $750
b. credit to Cash for $54,500
c. credit to Cash for $50,000
d. debit to Interest Expense for $750

Answer 1

Answer:

Note payable        75,600 debit

Interest expense       1,134 debit

          Cash                        76,734 credit

Explanation:

NOTE: it semes you paste possible answer for a differnt questions.However it is possible to determiante a correct answer:

interest will be calculate as follows:

principal x rate x time = interest

we should match rate and time in the same metric, in this case portion of a 360 days years:

75,600 x 0.09 x 60/360 = 1.134‬

As we take the debt, this interst are expense.

To record this, we will write-off the note principal, post the interest expense and credit the total amount of cash disbursements to pay up the debt.

Note payable        75,600 debit

Interest expense       1,134 debit

          Cash                        76,734 credit